U.S. home price insights — December 2025
National home price growth slowed noticeably throughout 2025, moving from a 3.4% annual increase in January to just 1.1% by October—the weakest pace since 2012. According to Cotality Chief Economist Dr. Selma Hepp, this cooldown marks a healthy rebalancing after years of rapid, unsustainable appreciation. Higher mortgage rates, increased inventory, slower in-migration and softer demand all contributed to the deceleration. While some metros continued posting gains, many, especially in Florida, Texas, California and parts of the Mountain West, shifted into year-over-year declines as local markets adjusted to changing conditions.
Regional differences became more pronounced, with some affordable, opportunity-rich markets still seeing modest appreciation, while others cooled significantly. By October, 32 major metros were experiencing price drops, up from only six at the start of the year. Looking ahead to 2026, Dr. Hepp notes that home price growth is expected to remain below the typical 4–5% average unless mortgage rates fall meaningfully, an event that could reignite price pressures given still-limited housing supply.
