Home prices picked up the pace in May, indicating buyers in some areas are able to move past elevated mortgage rates, while further widening the affordability gap that continues to divide buyers across the nation, according to the latest data.
Cotality’s latest Home Price Index, released this past week, found that home price growth increased 0.8% year-over-year and 0.6% month-over-month in May 2026.
Home prices held firmer this spring compared to last year when Cotality saw home prices drop significantly.
The report found that the Midwest continues to remain the most budget-friendly region in the U.S. At the state level, Illinois led year-over-year growth at 5.9%, followed closely by Maine at 5.6% and Indiana at 5.6%. Spring momentum—measured from February to May—was particularly strong in Midwest metros like Lake County, Indiana, which grew by 5.9%, Milwaukee, Wisconsin, at 4.8%, and Indianapolis, Indiana, at 4.7%.
The top markets at risk for price declines in the next 12 months, according to Cotality’s Market Risk Indicators include: Greenville-Anderson-Greer, South Carolina; Lakeland–Winter Haven, Florida; Marietta, Georgia; Rochester, New York; and Tampa, Florida.
According to Cotality’s Market Condition Indicators, 72% of the largest 100 metros are currently overvalued, meaning their current home price indexes exceed their long-term values by greater than 10%, while 21% are normal and 7% are undervalued.
Illinois saw the most annual growth in May, increasing by 5.9%, followed by Maine and Indiana (5.6%), Nebraska (5.0%), and Connecticut (4.9%).
San Francisco posted the highest year-over-year home price increase of the country’s 100 largest metro areas in May, at 8.9%. Chicago saw the second highest gain at 6.2%
“The U.S. housing market in mid-2026 remains firmly entrenched in a geographic split, shaped fundamentally by an affordability gap and a wealth gap that continues to divide buyers across the nation,” said Cotality Chief Economist Dr. Selma Hepp. “On one hand, buyers who are well-insulated from mortgage rate volatility—bolstered by substantial accumulated home equity and robust wealth gains—are continuing to look at high-value regions like San Francisco, driving a strong near-9% annual rebound in a market that remains fundamentally healthy and structurally undervalued relative to long-term income baselines. On the other hand, elevated mortgage rates, property taxes, insurance, and other costs of homeownership continue to keep buyers out of the market.”
Click here to read the full report.
