American home values continue to grind higher even as buyer activity slows sharply, creating a market where prices rise but far fewer transactions close. The national picture, however, masks a striking split: several fast-growing metro areas are posting strong price gains while keeping median costs well below the national figure. That disconnect between momentum and affordability offers a window for buyers who have been priced out of coastal markets.
Sales Slide While Prices Hold Firm
The housing market opened 2026 with a paradox. Existing-home sales fell 8.4% in January to a seasonally adjusted annual rate of 3.91 million units, even though mortgage rates continued to ease during the same period. That combination—fewer closings alongside loosening borrowing costs—points to a supply problem rather than a demand problem. Many homeowners locked into sub-4% mortgages during the pandemic era still have little incentive to list, which keeps inventory tight and props up values.
The median price of an existing home in January 2026 rose 0.9% year over year to $396,800, according to the same data. Prices have now climbed on a year-over-year basis for an extended stretch despite sluggish transaction volumes. For prospective buyers, the takeaway is blunt: waiting for a broad price correction has not paid off, and the lock-in effect that discourages current owners from selling has been slow to ease. Instead, buyers are being pushed to look beyond the usual hot spots toward markets where prices are lower but still rising fast enough to build equity.
National Indexes Confirm a Slow but Steady Climb
Multiple independent benchmarks reinforce the same upward trend. The S&P CoreLogic Case-Shiller National Home Price Index increased 1.4% year over year in October 2025, while the 20-city composite rose 1.3% over the same period. Separately, the National Association of Realtors reported that home prices increased in 168 of 230 metro areas during the fourth quarter of 2025, covering roughly 73% of tracked markets. The national median single-family existing-home price reached $414,900 in Q4 2025, a 1.2% annual gain that underscores how broad-based the appreciation has become.
The Federal Housing Finance Agency tracks a parallel measure through its House Price Index, which relies on a repeat-sales methodology applied to conforming mortgage data tied to Fannie Mae and Freddie Mac. Because FHFA figures capture only loans within conforming limits, they tend to reflect middle-market activity more than luxury sales, making them a useful gauge of what typical buyers actually face. All three yardsticks—Case-Shiller, NAR’s quarterly report, and the FHFA HPI—point in the same direction: moderate but persistent appreciation that keeps ownership costs climbing faster than most household incomes, even as many buyers scale back budgets or postpone moves.
Chicago and Other Affordable Metros Outpace the Pack
The national averages obscure a striking divergence at the metro level. Chicago posted a 5.8% year-over-year price increase in October 2025 according to the Case-Shiller 20-city composite, making it one of the strongest performers in the index. Yet Chicago’s median home price remains well below the $414,900 national figure, meaning buyers there benefit from above-average appreciation on a property that costs less to acquire in the first place. That dynamic—strong growth on a low base—is the definition of the “surprisingly affordable” boom city, where households can still enter the market without stretching to the breaking point.
The RE/MAX National Housing Report for January 2026, which covers 52 metro areas, reinforces this pattern. Released from Denver, the report described January as the housing market’s typical annual reset, delivering the lowest sales activity of the year. But within that slowdown, certain smaller and mid-size metros continued to show price strength without the sticker shock associated with San Francisco or New York. Manchester, New Hampshire, for instance, recorded a 15.5% year-over-year price gain across the 52 markets tracked by RE/MAX. Markets like these attract remote workers and young families precisely because entry costs remain manageable even as values appreciate briskly, offering a rare combination of relative affordability and rapid equity growth.
Contrast that with Tampa, where prices fell 4.2% year over year in October 2025 according to Case-Shiller data. Tampa had been one of the pandemic-era darlings, surging on migration from the Northeast, but rising insurance costs and a flood of new construction have started to weigh on values. Other former boomtowns in parts of the Sun Belt have seen similar cooling as investors pull back and affordability erodes. The lesson is that not every migration magnet sustains its gains, while less glamorous Midwestern and New England cities can deliver steadier returns at a fraction of the buy-in, especially when local economies are diversified and not overly dependent on a single industry.
Why Affordable Boomtowns May Keep Gaining Ground
The mechanics behind these affordable yet fast-appreciating markets are straightforward. Cities like Chicago benefit from deep labor markets, established transit systems, and housing stock that was never bid up to the extremes seen on the coasts. When remote and hybrid work arrangements allow households to choose location based on cost of living rather than commute distance, metros with solid infrastructure and lower price points naturally attract inbound demand. That demand, in turn, pushes prices higher, but from a starting point low enough that monthly payments remain within reach for many middle-income earners.
NAR’s metro affordability tables offer a way to quantify this advantage, pairing local prices with the income needed to qualify for a typical mortgage. In markets where wages are relatively strong and prices still sit below the national median, the required qualifying income can be significantly lower than in coastal hubs even after recent gains. That gap matters for both first-time buyers and move-up households: it widens the pool of eligible purchasers, supports demand through economic cycles, and makes it less likely that modest interest-rate moves will choke off activity. As long as these fundamentals hold, affordable boomtowns are positioned to keep gaining ground, even if national price growth slows.
What It Means for Buyers and Sellers
For buyers, the emerging map of winners and laggards suggests a more nuanced strategy than simply waiting for a nationwide downturn. The data on falling sales but rising prices, the steady climb in national indexes, and the outperformance of select affordable metros all point to a market where opportunity is highly local. Shoppers who have been shut out of coastal markets may find better odds by considering cities that combine below-average prices with clear signs of job growth and infrastructure investment, accepting slightly longer commutes or new regions in exchange for a more attainable path to ownership.
Sellers, meanwhile, face a different calculus depending on where they live. In high-cost markets that have already seen explosive appreciation, pricing aggressively above recent comparables may backfire as buyers become more selective and financing costs, while lower than their peak, remain elevated compared with the pre-pandemic era. In affordable boomtowns, however, owners may be able to command firm prices or even modest premiums, particularly for well-maintained homes in desirable school districts or near transit. In both cases, the message from the latest data is the same: the era of easy, across-the-board gains is over, but for households willing to follow the numbers into underappreciated metros, the combination of relative affordability and steady price growth still offers a compelling—if more targeted—route into the American housing market.
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*This article was researched with the help of AI, with human editors creating the final content.
Elias Broderick specializes in residential and commercial real estate, with a focus on market cycles, property fundamentals, and investment strategy. His writing translates complex housing and development trends into clear insights for both new and experienced investors. At The Daily Overview, Elias explores how real estate fits into long-term wealth planning.
