These U.S. Markets Are Expected to See the Strongest Home Price Growth in 2026

After several years of rapid growth, the U.S. housing market entered a cooler, more measured phase in 2025. Higher mortgage rates, affordability pressures, and uneven inventory slowed price growth in many regions. Still, home values largely held steady, and in some markets, continued to rise modestly.

Looking ahead to 2026, most housing experts expect this trend to continue: moderate national price growth, paired with significant variation at the local level. In other words, the biggest gains are unlikely to be evenly distributed. Instead, appreciation is expected to favor markets with strong economic fundamentals, limited housing supply, and sustained demand.

Home Price Performance in 2025: FHFA Snapshot

Data from the Federal Housing Finance Agency (FHFA) shows that home prices increased in 44 states and the District of Columbia between the third quarter of 2024 and the third quarter of 2025. This broad-based growth highlights continued demand, even as conditions cooled in certain regions.

The five states with the highest annual appreciation during that period were:

1. Illinois: 6.9%
2. New York: 6.8%
3. North Dakota: 6.3%
4. New Jersey: 5.9%
5. Connecticut: 5.8%

Meanwhile, prices declined in six states, with Florida recording the largest year-over-year decline of 2.3%. This division reinforces a central theme heading into 2026: housing performance is increasingly localized, shaped by state- and metro-level economic conditions rather than national trends alone.

How We Calculated Our 2026 Home Price Forecasts

Rather than predicting exact home values or percentage increases, this forecast focuses on relative appreciation potential—identifying areas that may outperform national averages in 2026.

Our analysis draws on commonly used housing indicators, including:

• Historical price performance and momentum
• Housing supply and new construction trends
• Population growth and migration patterns
• Employment growth and economic diversity
• Affordability compared to nearby or peer markets

This approach mirrors how many economists and housing analysts evaluate future price direction: by identifying long-term structural strengths rather than short-term market noise.

2026 Home Price Appreciation: Markets to Watch

While no market is guaranteed to rise, the following areas stand out as having conditions that support continued demand and potential outperformance.

New York

New York’s 6.8% annual increase signals sustained demand across both urban and suburban markets, with Rochester specifically projected as one of the top housing markets in 2026. Ongoing housing shortages, particularly in downstate regions, may continue to place upward pressure on prices despite affordability concerns.

Missouri

St. Louis is widely cited by housing analysts as one of the Midwest markets most likely to heat up in 2026. Forecasts from multiple industry sources point to its combination of relative affordability, strong fundamentals, and stable demand as drivers for continued price strength.

Minnesota

The Twin Cities area is another region expected to perform well in 2026. According to analysis from the National Association of Realtors (NAR), the region of Minneapolis-St. Paul benefits from improving affordability as mortgage rates ease and a growing number of households become eligible to buy. Strong employment fundamentals, solid wage growth, and a more balanced inventory contribute to its upside potential relative to many other metros.

South Carolina

Charleston, South Carolina, stands out in the Southeast for its combination of improving affordability, demographic demand, and strong buyer interest. Charleston represents favorable housing fundamentals for the year ahead, including rising income growth and a growing pool of households within reach of local median home prices.

The Charlotte metropolitan area, spanning both North and South Carolina, is an area to watch as well. Key drivers in the region include an influx of younger households and professionals, solid wage growth, and steady net migration—all of which support ongoing demand for homes.

New Jersey

Northern New Jersey’s proximity to major employment hubs, combined with chronic inventory shortages, has helped sustain price growth. These dynamics suggest continued resilience heading into 2026.

Connecticut

Connecticut—especially Hartford and its suburbs—stands out among the top performers, benefiting from spillover demand from higher-cost neighboring states. Relative affordability and constrained supply remain key drivers of overall appreciation.

Ohio

Ohio earns a spot on the watch list thanks to cities like Cleveland, Columbus, and Toledo, which rank among some of the top housing markets for 2026 based on a combined forecast of home price and income growth. These metro areas stand out for their relative affordability compared to national averages, which continues to attract buyers priced out of larger Midwest and coastal markets.

Why Some Markets Are Falling Behind

While most states saw home price gains through 2025, FHFA data shows that a small number of markets experienced declines—highlighting how local conditions can outweigh national trends.

Florida is one state that stands out. After years of rapid appreciation fueled by migration and investor demand, parts of the state began to cool, with home prices falling 2.3% year over year between Q3 2024 and Q3 2025. Increased housing supply, rising insurance and property tax costs, and affordability pressures have dampened buyer demand in certain areas.

Similar patterns have appeared in some major pandemic-era boomtowns, where home price growth has slowed or even begun to retreat after earlier rapid increases. Markets such as those in Austin, Boise, and Phoenix—which saw significant price gains during the pandemic—have experienced slowed appreciation in recent periods as higher mortgage rates and rising inventory give buyers more leverage and reduce upward pressure on prices.

These markets highlight a key lesson as we head into 2026: strong past growth doesn’t guarantee future appreciation. Areas with sustainable demand, limited supply, and stable economic drivers are more likely to outperform than those adjusting after rapid expansion.

Factors That Will Shape Home Prices in 2026

Several important factors will influence which markets continue to rise:

• Inventory levels: Tight housing supply remains one of the strongest predictors of appreciation.
• Economic stability: States with diverse employment bases tend to experience steadier price growth.
• Migration trends: Sustainable, long-term population growth matters more than short-term surges.
• Affordability relative to alternatives: Buyers often gravitate to nearby markets offering better value.

For buyers and investors looking to dig deeper, using a property search tool can help analyze neighborhood-level data, compare recent sales, and identify areas showing early signs of appreciation before broader market recognition.

Final Thoughts: What This Means for 2026

2025 housing data confirms a powerful takeaway: U.S. home prices have demonstrated long-term upward momentum, even amid economic headwinds. However, the path forward in 2026 is likely to be uneven, with appreciation favoring markets supported by strong fundamentals rather than speculative growth.

Understanding local conditions—and backing decisions with reliable property research—will be essential for identifying the next group of appreciation winners.