Home price growth slows further as affordability crunch keeps buyers on sidelines
More markets are turning negative, with 13 states now seeing annual price declines
Growth slows to a crawl as housing market “rebalances”
U.S. home price growth slowed again in February, underscoring a housing market increasingly constrained by affordability pressures and hesitant buyers.
According to new data from Cotality, national single-family home prices rose just 0.5% compared with a year earlier, extending a steady deceleration that began in 2025.
On a monthly basis, prices fell 0.16% from January, a sign that demand remains soft even as the spring homebuying season approaches, according to Morningstar, Inc.
The report characterizes the market as “rebalancing,” with buyers and sellers locked in a standoff driven largely by high borrowing costs and stretched household budgets.
Affordability pressures reshape the market
The slowdown comes after years of rapid price gains that far outpaced income growth. Now, higher mortgage rates and persistent inflation are limiting how much buyers can afford — and how quickly prices can rise.
Recent broader data show the same pattern: national home price growth has slipped below inflation for months, effectively eroding real home values, The Wall Street Journal said.
That dynamic is pushing more buyers to delay purchases, while some sellers are choosing to wait rather than cut prices — contributing to low transaction volumes and muted price movement.
More markets slipping into decline
One of the most notable shifts in the February data is how widespread the slowdown has become.
13 states — including Washington, D.C. — posted year-over-year price declines
Many previously hot markets are now cooling, particularly in the South and West
Regional strength is increasingly concentrated in parts of the Midwest and Northeast
At the metro level, some Northeastern markets continue to outperform. For example, Newark, New Jersey, saw one of the strongest gains at 6.7% year over year, followed by Rochester, New York, Morningstar said.
But the broader trend is clear: price growth is no longer widespread, and declines are becoming more common.
A market stuck between buyers and sellers
Housing economists say the current environment reflects a fundamental imbalance.
After years of surging home values, many homeowners remain reluctant to lower asking prices — particularly if they locked in low mortgage rates earlier in the cycle. At the same time, buyers are constrained by higher borrowing costs and affordability limits.
The result is a market with:
Low sales activity
Minimal price growth
Increasing regional divergence
Earlier Cotality data described the situation as a “disconnect between incomes and home prices,” with both sides waiting for conditions to shift.
What this means for consumers
For buyers, the cooling trend may offer some relief — but not necessarily affordability.
Slower price growth can reduce bidding wars
But high mortgage rates still keep monthly payments elevated
Inventory remains tight in many areas, limiting options
For homeowners, the shift signals a more cautious outlook:
Price appreciation is no longer guaranteed
Some markets may see outright declines
Timing a sale becomes more uncertain
Outlook: modest gains, but no quick rebound
Despite the current slowdown, Cotality expects the market to gradually regain momentum over the next year.
Its forecast calls for home price growth to accelerate to about 4.7% by February 2027, suggesting stabilization rather than a sharp correction.
Still, that recovery hinges on improvements in affordability — particularly lower mortgage rates or stronger income growth.
Until then, the housing market appears set for a prolonged period of slow growth, limited sales, and uneven regional performance.