Cotality: Home Price Growth Ticks Up to 1.8%, but 31 Metros Lose Near-Term Momentum

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U.S. home-price growth accelerated slightly in August, but the national headline masked a housing market splitting more sharply by region as elevated mortgage rates pushed more buyers to the sidelines.

Single-family home prices rose 1.8% from a year earlier, up from 1.6% annual growth in July, according to Cotality’s August Home Price Index. Prices slipped 0.1% from July on a month-over-month basis.

The more important signal for the fall market may be beneath the national average. Cotality said 31 of the 100 largest metropolitan areas posted negative three-month price momentum in August, up from 19 in July. San Francisco, for example, remained 7% above its year-earlier level but recorded a 2.7% decline on the shorter three-month measure.

Regional divide keeps widening

Twenty-one states reached new price highs in August, with the strongest annual gains concentrated largely in the Midwest and Northeast. Illinois led at 6.8%, followed by Connecticut at 6.3%. Indiana and New Jersey each rose 5.6%, while Alaska gained 5.1%.

At the other end of the market, Washington posted a 0.4% annual decline, Texas fell 0.7% and Hawaii declined 0.8%. Cotality attributed the divide to a combination of mortgage-rate lock-in, migration shifts, local inventory and differences in job and population growth.

The data adds context to other signs of weakening demand this fall. WRE News reported Tuesday that Zillow’s September pending-home-sales measure fell 8.5% from a year earlier as borrowing costs rose sharply.

“Looking ahead to 2027, mortgage rates will be the primary driver of home price trends and sales activity,” Cotality Chief Economist Selma Hepp said. She noted that many buyers stop searching when rates move above 7%, although a prolonged higher-rate environment could eventually convince some households to stop waiting for a large decline in financing costs.

Cotality expects weaker price growth into winter

Cotality expects monthly home-price changes to turn negative through the winter and projects annual appreciation of about 1.3% for full-year 2026. Its forecast calls for national prices to be 1.6% higher in August 2027 than in August 2026.

The company’s Market Risk Indicators identify Buffalo-Cheektowaga, New York; Cambridge-Newton-Framingham, Massachusetts; Providence-Warwick, Rhode Island-Massachusetts; St. Petersburg-Clearwater-Largo, Florida; and Worcester, Massachusetts, as the markets with the highest risk of price declines over the next 12 months.

Cotality’s index draws on public records, servicing and securities databases and more than 50 years of repeat-sales transactions. The next report, covering September, is scheduled for Nov. 3.