Cotality: Local Economies, Not National Trends Drive US Home Prices

Rising mortgage rates cooled home prices this summer, with more metros posting negative three-month price momentum.

• National home price growth remained modest in July, rising 1.4% year over year.
• The Midwest and Northeast continued to lead appreciation, topped by Connecticut and Illinois (both 6.8%), Indiana (5.3%), New Jersey (5.0%), and Nebraska (4.9%).
• Annual price declines were concentrated in Texas (-0.8%) and parts of the West, including Colorado (-0.7%), Washington (-0.4%), and Hawaii (-0.2%).

IRVINE, Calif.--(BUSINESS WIRE)--Cotality, a leader in property information, analytics, and data‑enabled solutions, today released its Home Price Index™ with July 2026 data. Home price growth increased by 1.4% year-over-year.

August data reinforces the existing regional divides between markets. Underneath the modest national price gains, Cotality data shows the full story with nuance. Across the U.S., an increasing number of metros are cooling even in areas that previously demonstrated resilience.

While the Sun Belt continues to see weak growth, pockets of the Northeast — which have remained stubbornly resilient to price declines — are beginning to show signs of a shift. Philadelphia posted the sharpest drop in annual momentum among top markets, falling 2.3 percentage points from June. Still, price decreases are concentrated in the western areas of the U.S., with powerhouses like San Francisco recording a 2.6% drop in prices over the last three months. San Jose also experienced one of the sharpest three-month price drops.

The largest three-month declines remain concentrated in the West, including San Jose, CA; Austin, TX; Bakersfield, CA; and Everett, WA. This suggests elevated prices, buyer fatigue, and uncertainty around AI-fueled wealth gains are weighing heavily on higher-priced markets.

Pockets of appreciation do still exist. Connecticut and Illinois saw the largest annual home price growth at 6.8% followed by Indiana (5.3%), New Jersey (5.0%), and Nebraska (4.9%). Prices in the Northeast continue to rise generally, due to very few homes coming onto the market and a lack of new construction.

At a more local level, some areas are bucking state-level trends. Abilene, TX, continues to lead the nation with a 13.3% year-over-year increase supported by local AI-related investment — and the wages that come with it.

"While prospective buyers may feel squeezed by volatile mortgage rates, slower home price appreciation should gradually help ease affordability pressures—especially if wage growth remains consistently stronger," said Dr. Selma Hepp, Cotality’s Chief Economist. "As we move through the remainder of the year, local labor market dynamics and affordability constraints will continue to shape housing market performance as much as broader macroeconomic shifts, especially the direction of mortgage rates," added Dr. Hepp.

Cotality predicts the dynamics of local economies will define the nation’s fractured housing market while mortgage rates remain elevated.

Top Takeaways:

• U.S. single-family home prices increased by 1.4% year over year in July 2026 compared with July 2025. On a month-over-month basis, home prices increased by 0% from June 2026.
• Cotality’s forecast shows annual U.S. home price gains increasing by 2.0% year-over-year in July 2027.
• Following four months of the highest year-over-year home price increases in the nation, San Francisco had an abrupt turnaround in signals, with a 1.4% decrease in prices month over month this July.
• Among states, Connecticut and Illinois saw the most annual growth in July, increasing by 6.8%. It was followed by Indiana (5.3%), New Jersey (5.0%), and Nebraska (4.9%).
• 19 metros posted negative three-month price momentum in July, up from 10 in June.
• The top markets at risk for price declines in the next 12 months, according to Cotality’s Market Risk Indicators include: Buffalo-Cheektowaga, NY; Cambridge-Newton-Framingham, MA; Providence-Warwick, RI-MA; St. Petersburg-Clearwater-Largo, FL; and Worcester, MA.
• The metros identified as having the highest risk of home price declines are concentrated in the Northeast, where affordability has deteriorated significantly relative to local incomes. As local incomes have failed to keep pace with rising home values, these markets have become more vulnerable to price corrections.

We want to note Cotality’s models for the HPI forecast have been updated from HPIF v 4.6 to HPIF v5.0, incorporating enhancements designed to improve forecast accuracy and better reflect current housing market dynamics. As a result, forecast estimates may differ from those published in prior releases. The next Cotality Home Price Index will be released on October 6, 2026, featuring data for August 2026. For ongoing housing trends and data, visit the Cotality Insights blog: www.cotality.com/insights.

Methodology

The Cotality HPI^™ is built on industry-leading public record, servicing, and securities real-estate databases and incorporates more than 50 years of repeat-sales transactions for analyzing home price trends. Generally released on the first Tuesday of each month with an average five-week lag, the Cotality HPI is designed to provide an early indication of home price trends by market segment and for the Single-Family Combined tier, representing the most comprehensive set of properties, including all sales for single-family attached and single-family detached properties. The indices are fully revised with each release and employ techniques to signal turning points sooner. The Cotality HPI provides measures for multiple market segments, referred to as tiers, based on property type, price, time between sales, loan type (conforming vs. non-conforming) and distressed sales. Broad national coverage is available from the national level down to ZIP Code, including non-disclosure states.

Cotality HPI Forecasts^™ are based on a two-stage, error-correction econometric model that combines the equilibrium home price—as a function of real disposable income per capita and housing supply constraints—with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks like changes in the unemployment rate. With a 30-year forecast horizon, Cotality HPI Forecasts project Cotality HPI levels for two tiers — Single-Family Combined (both attached and detached) and Single-Family Combined Excluding Distressed Sales. As a companion to the Cotality HPI Forecasts, Stress-Testing Scenarios align with Comprehensive Capital Analysis and Review (CCAR) national scenarios to project five years of home prices under baseline, and severely adverse scenarios at state, metropolitan areas and ZIP Code levels.

About Market Risk Indicators

Market Risk Indicators are a subscription-based analytics solution that provide monthly updates on the overall health of housing markets across the country. Cotality data scientists combine world-class analytics with detailed economic and housing data to help determine the likelihood of a housing bubble burst in 400+ major metros and all 50 states. Market Risk Indicators is a multi-phase regression model that provides a probability score (from 1 to 100) on the likelihood of two scenarios per metro: a >10% price reduction and a ≤ 10% price reduction. The higher the score, the higher the risk of a price reduction.

About the Market Condition Indicators

As part of the Cotality HPI and HPI Forecasts offerings, Market Condition Indicators are available at the state, metropolitan area and county levels, identifying individual markets as overvalued, at value or undervalued. These indicators are derived from the long-term fundamental values, which are a function of real disposable income per capita and housing supply constraints. Markets are labeled as overvalued if the current home price indexes exceed their long-term values by greater than 10% and undervalued where the long-term values exceed the index levels by greater than 10%.

The data provided are for use only by the primary recipient or the primary recipient's publication or broadcast. This data should not be resold, republished or licensed to any other source, including publications and sources owned by the primary recipient's parent company without prior written permission from Cotality. Any Cotality data used for publication or broadcast, in whole or in part, must be sourced as coming from Cotality, a data and analytics company. For use with broadcast or web content, the citation must directly accompany first reference of the data. If the data are illustrated with maps, charts, graphs, or other visual elements, the Cotality logo must be included on screen or website. For questions, analysis or interpretation of the data, contact Charity Head at [e-mail]. Data provided should not be modified without the prior written permission of Cotality. Do not use the data in any unlawful manner. The data are compiled from public records, contributory databases and proprietary analytics, and its accuracy is dependent upon these sources.

About Cotality

Cotality accelerates data, insights, and workflows across the property ecosystem to enable industry professionals to surpass their ambitions and impact society. With billions of real-time data signals across the life cycle of a property, we unearth hidden risks and transformative opportunities for agents, lenders, carriers, and innovators. Get to know us at www.cotality.com.