Home prices continue to moderate in a sign of better times ahead for the housing market, providing some relief to buyers seeking better affordability, according to the latest data.
Cotality’s Home Price Index for February found that home prices saw only a 0.5% year-over-year growth, and saw a 0.16% fall from January.
The report found that 13 states (including the District of Columbia) saw year-over-year home price losses.The three largest year-over-year falls were in Washington, D.C. (-3.01%), Florida (-2.30%) and Montana (-1.52%).
The top markets most likely to see price declines in the next 12 months, according to Cotality’s Market Risk Indicators, were all in Florida for the second consecutive month: Cape Coral–Fort Myers, Deltona-Daytona Beach, Lakeland–Winter Haven, Palm Bay–Melbourne–Titusville and West Palm Beach–Boca Raton.
While there are bettering signs, Cotality noted that the “current market is divided, both nationally and within specific regions.”
Cotality’s Market Condition Indicators did note that currently 70 of the largest 100 metros are currently overvalued (meaning their current home price indexes exceed their long-term values by greater than 10%).
New Jersey ranked first for the highest year-over-year gains (up by 5.93%), followed by North Dakota (up by 4.92%) and Illinois (up by 4.83%). Newark, New Jersey also saw the highest year-over-year home price increase at 6.7%, followed by Rochester, New York at 6.3%.
“These diverse trends indicate an ongoing process of price discovery—one where sales and comparisons remain limited—and underscore a market that is rebalancing locally rather than correcting nationally,” said Cotality Chief Economist Dr. Selma Hepp. “Although the steady decrease in mortgage rates prior to the spring homebuying season raised hopes for a rebound in home prices and sales in 2026, the recent surge in rates has reduced demand in the housing market, shifting expectations for a broader recovery this year.”
