Home Prices Have Chilled Out. What’s Coming in 2026.

Slower price growth has been little balm for a stagnant housing market. (Elijah Nouvelage / Bloomberg)

Key Points

• Home prices in 20 major metropolitan areas increased 1.4% year-over-year in September, the slowest pace since 2023.
• National home prices rose 1.3% in September, a decrease from the 1.4% gain recorded in August.
• Forecasters anticipate a pickup in home sales in 2026 due to easing buying costs, with mortgage rates potentially falling.

Home prices grew at the slowest pace since 2023 in September, new data show. It’s part of the housing market’s march toward a “new equilibrium” of slow price growth or declines, one analyst said.

Prices tracked by the S&P Cotality Case-Shiller index measuring 20 large metropolitan areas increased 1.4% from the year prior, in line with consensus estimates and the eighth straight month of slowing price growth. Prices nationally grew 1.3%, slower than the 1.4% gain they logged in August. The measure lags behind other readings, but is closely watched because of its methodology, which controls for factors other data sources don’t, like size and type of home.

The reading “represents the weakest annual price growth since early 2023, when the market was absorbing the initial shock of the Federal Reserve’s aggressive rate-hiking cycle,” said Nicholas Godec, head of fixed income tradables and commodities for S&P Dow Jones Indices.

“With mortgage rates stubbornly elevated and affordability at multi-decade lows, the market appears to be settling into a new equilibrium of minimal price growth—or, in some regions, outright decline,” he added, in a statement.

The “pandemic darlings,” places in the sunbelt states like Florida, Arizona, and Texas where price appreciation took off just a few years ago, are now seeing the greatest declines, Godec said.

Of the 20 cities tracked by the indices, prices in Tampa, Phoenix, and Dallas fell the most—4.1%, 2%, and 1.3%, respectively, from the year before.

Prices gained the most in Chicago, New York, and Boston—5.5%, 5.3%, and 4.1%, respectively. A Detroit reading was excluded from the release because of data-collection problems. issues.)

Home sales for the past several years have been restrained by higher costs. Existing-home sales measured by the National Association of Realtors remained in October significantly slower than the prepandemic norm.

But three industry forecasters, the National Association of Realtors, the Mortgage Bankers Association, and Fannie Mae, foresee a pickup in home sales in 2026 as buying costs ease. But the source of those savings differ.

The National Association of Realtors expects the greatest savings to come from a decline in mortgage rates. It foresees mortgage rates next year averaging around 6%, while median prices perk up 4%. “Home prices nationwide are in no danger of declining,” Lawrence Yun, the trade group’s chief economist, said in a statement.

Fannie Mae sees price growth easing, but not dropping, while mortgage rates fall as low as 5.9% by the end of 2026. The Mortgage Bankers Association, meanwhile, estimates mortgage rates to remain around 6.4% through next year, with prices expected to slow and go slightly negative in the final two quarters of 2026.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com