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This winter marked a slowdown in the economy, with annual home price increases dropping to the lowest rates seen since the recovery from the Great Recession. While some areas still experience strong price growth, others are witnessing significant declines.
Recent data from Cotality, a firm specializing in analytics for the real estate sector, indicates that home price hikes slowed to just 0.9% in December, a notably low rate since the post-Great Recession recovery.
“This shift is quite striking when compared to the rapid increases seen in recent years. Although there are still some upward pressures, they have lessened enough to suggest that the market is becoming more navigable for would-be buyers,” remarked Thelma Hepp, chief economist at Cotality.
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Home prices are declining across several key regions in the South and West. This is especially true in areas that had previously been booming, as immigration trends slow and inventory levels rise.
The most significant price drop was reported in Hawaii’s Kahului Wailuku, where prices fell by 8% in December compared to a year prior, according to a Cotality report.
In Texas, Victoria and Wichita Falls ranked among the top ten areas for steepest declines, with drops of 7.4% and 7.2%, respectively.
Napa, California, was the worst-hit locale on the West Coast, seeing prices plunge by 7.1%.
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Florida had five communities in the top ten with the sharpest price declines, led by Naples (-6.8%), both Punta Gorda and Cape Coral (-6.2%), Northport (-5.9%), and Sebastian (-5.2%).
Rome, Georgia, also made the top ten list with a 5.2% decline in year-over-year prices.
On the flip side, Youngstown, Ohio, emerged as the hottest housing market, with a 15.9% increase over the past year.
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Four of the top markets were in Indiana, with Terre Haute ranking second nationally with an 11.4% rise. Other notable increases were seen in Columbus and Muncie (up 10.2% each) and Kokomo (up 8.8%).
Illinois also had significant price increases, with Decatur rising by 10.5% and Peoria by 8.9%.
Two additional markets in the Midwest and Plains—Manhattan and Traverse City, Michigan—also made the list with price rises of 8.7% and 8.5%, respectively.
Hattiesburg, Mississippi, was identified as the hottest housing market in the South, showing an 8.4% increase compared to the previous year.
“Looking ahead to 2026, the direction of the market will be heavily influenced by wage growth and how quickly buyers can regain the purchasing power needed to meet sellers’ price expectations. For now, Cotality’s data indicates that the housing environment is stabilizing after a lengthy period of imbalance,” Hepp concluded.
