Overview
Spring homebuying season continues to be defined by slower price growth and tepid home buying activity.
- Year-over-year price growth dipped to 1.8% in May 2025, down from 5% price growth last May and slowest since the winter of 2012.
- Seasonal increase in home prices continues to be weak, up 0.3% compared to the month before, and less than half of 0.8% increase typically seen between April and May
- In more affordable Midwestern markets, such as Indianapolis, Kansas City, and Knoxville, as well as markets surrounding New York metro, seasonal gains in May continued to outperform pre-pandemic trends
- Illinois, up 6.4% year-over-year entered the top 5 states with the highest home price growth, following Rhode Island, New Jersey, Wyoming and Connecticut which all continue to record more than triple the national rate of price growth
- Florida, Texas, Hawaii, and Washington D.C. reported negative home price growth.
National home price growth
May 2025 data
Source: Cotality
Affordability meter
Source: Cotality
Insights from Chief Economist Selma Hepp
While the national home price index continues to move up, the rate at which it’s climbing has slowed considerably. May posted sub-2% price growth for the first time in over 13 years. This is a drop compared to earlier this year when home prices were growing at above 3%, interest rates were slipping, and the forecast for the market was stronger — even while inventory remained low. Now, inventory is climbing, but people are hesitant to buy. Concerns about affordability, economic outlook, and elevated mortgage rates are holding buyers back. Similarly, there are now fewer cash buyers in the market indicating that the types of shoppers may be changing.
Across the country, the market has a split character. The Northeast and the Midwest are home to some of the hottest markets in the country while Texas, Hawaii, Florida, and the Washington D.C. are posting negative home price growth of -0.5%, -0.7%, -1.3%, and -2.1%, respectively. The variation in home price growth is largely driven by the availability of homes for sale. Many markets in the South and Desert West have seen strong rebounds in available inventory, and amid weaker demand, these markets are facing some downward pressure on home prices. At the same time, many of these same markets have grown relatively more unaffordable over the course of the last few years, with cumulative increases in home prices averaging 60% to 70%, compared to the overall national increase of 48% since spring of 2020. As a result of overvaluation, and concerns around rising non-fixed costs like property taxes and insurance, those markets are now readjusting.
For example, a typical mortgage payment (including principal and interest) in Cape Coral, FL — a region that has seen the most extensive price declines so far — is now about 95% higher than it was for a buyer who bought in 2020. Current monthly payments sit at about $2,187 as compared to $1,122 in 2020. Still, homebuyers who bought a few years ago are not isolated from surging homeownership expenses since jumps in insurance and property taxes mean that their annual expenses for those costs have gone up by about 70% since 2020. This increase in variable costs is another reason for rising inventories since those who own second or investment homes are facing high maintenance costs for owning properties in these markets.
“While prices were up from a year ago, the rate of gain is slipping as rising ownership costs and increasing inventory is pulling prices down in many markets. The share of markets posting annual decreases in the home price index has steadily increased this year. It reached 19% in May, a share not seen since 2012,” said Cotality’s Chief Economist Dr. Selma Hepp.
Home prices in many markets have hit the wall, leading to more areas with falling or slowing year-over-year prices. Still, as the national index suggests, more markets continue to see some growth which is driving the overall national increase. However, with the annual growth rate now slower than the rate of inflation, real home prices are falling, which suggests improved affordability going forward.
Top 10 hottest markets
Source: Cotality
Top 10 coolest markets
Source: Cotality
Which areas are affordable?
Tracking the top 5 highest and lowest U.S. median sales prices
Source: Cotality
Markets to watch
Tracking markets with a very high risk of price decline in the top 100 CBSAs
Source: Cotality
High-risk market home price trends
Source: Cotality
