The housing market has cooled this winter, with the annual pace of home price growth easing to levels not seen since the recovery from the Great Recession.
New data from Cotality, described as “a data analytics and tech company in the real estate, mortgage and insurance industries,” showed that “annual housing price growth slowed to just 0.9% in December,” marking “one of the softest rates since the post-Great Recession recovery.”
“We are seeing a significant departure from the rapid surges of recent years; while the upward pressure on prices remains, the momentum has moderated enough to suggest that the market is finally becoming more navigable for prospective buyers,” said Cotality Chief Economist Selma Hepp.
Regional Declines Emerge in the South and West
While some areas continue to experience strong price growth, others are reporting notable declines. The report stated that “home prices have declined in several key areas across the South and West,” particularly in markets that previously experienced rapid expansion “as in-migration trends moderate and inventory levels increase.”
According to Cotality’s findings, “the local housing market with the steepest declines was Kahului-Wailuku, Hawaii, with prices down 8% in December on a year-over-year basis.”
Texas had two localities in the top 10 for price declines, with “Victoria, Texas, down 7.4% and Wichita Falls, Texas, down 7.2%.”
In California, “Napa… had the steepest decline among West Coast localities, with prices falling 7.1%.”
Florida accounted for five of the 10 markets with the largest price drops, “led by Naples (-6.8%), Punta Gorda and Cape Coral (-6.2% each), North Port (-5.9%) and Sebastian (-5.2%).”
“Rome, Georgia, rounded out the top 10 with a 5.2% year-over-year price decline.”
Midwest Markets Lead Price Gains
Despite the broader cooling trend, some markets posted significant gains. The report identified “Youngstown, Ohio” as “the hottest housing market,” where “prices surged 15.9% over the last year.”
Indiana represented four of the hottest markets, “led by national runner-up Terre Haute’s gain of 11.4%.” Other Indiana metros cited were “Columbus and Muncie, with 10.2% gains each, and Kokomo’s 8.8% increase.”
Illinois also recorded strong growth, with “prices in Decatur” rising “10.5% and Peoria 8.9%.”
Additional markets among the 10 hottest included “Manhattan, Kansas,” where prices rose “8.7%,” and “Traverse City, Michigan,” with an “8.5%” increase.
In the South, “Hattiesburg, Mississippi” was identified as the hottest housing market in the region, with prices up “8.4% over the last year.”
Market Outlook Hinges on Wages and Buyer Power
Looking ahead, Hepp noted that “as we move through 2026, the market’s trajectory will depend heavily on wage growth and how soon buyers regain the purchasing power needed to meet sellers’ pricing thresholds.”
“For now, Cotality data shows a housing landscape is still finding its footing, but it is ultimately stabilizing after an extended period of imbalance,” she said.
