For the first time in years, the math on buying a home is shifting—not dramatically, but meaningfully. The average U.S. home value sat at $360,727 as of the latest Cotality (formerly CoreLogic) data, up just 0.1% over the past year. National inventory is approximately 20% above year-ago levels, giving buyers more choices than at any point since before the pandemic-era buying frenzy.
That doesn't mean it's suddenly easy or cheap to buy a home. Mortgage rates at 6.38% still create affordability challenges that have frozen much of the market. But the supply picture is changing in ways that matter for buyers, sellers, and anyone trying to read where prices are headed over the next 12 months.
The Regional Split: Where Prices Are Falling and Where They're Rising
National averages obscure more than they reveal in today's housing market. The most important story right now is a deepening regional divergence that is creating very different conditions depending on where you live—or where you're looking to buy:
- The South is declining: Markets across the Southeast, Texas, and parts of Florida are seeing outright year-over-year price declines. Eleven states recorded negative annual home price growth as of June 2026. The pandemic-era migration boom that drove these markets to extreme valuations has unwound, and local inventory has built up as supply finally caught up with demand that is no longer there
- The Northeast is firm: Boston, New York metro, and much of New England continue to post positive price gains. Supply constraints are structural in these markets—zoning restrictions, geographic limits, and high existing-owner equity create persistent supply shortfalls that support prices even as sales volumes decline
- The Midwest holds steady: Cities like Columbus, Indianapolis, and Minneapolis are showing modest appreciation in the 2–4% range. These markets never got as overheated as Sun Belt metros and are benefiting from relative affordability compared to coastal alternatives
- The Mountain West and Pacific Coast are mixed: Markets that saw extreme appreciation in 2020–2022 (Phoenix, Boise, Austin) are seeing corrections, while San Francisco and Seattle have stabilized after earlier declines
Why Inventory Is Up—and What That Actually Means
The 20% increase in inventory sounds like a buyers' market breakthrough, but the nature of that inventory matters. Most of the new supply isn't coming from the locked-in owners who bought at 3% mortgage rates—they're still largely staying put. Instead, the increase reflects:
- New construction completions that were started 18–24 months ago when builders were racing to meet demand; that pipeline is now delivering into a slower market
- Life-event sellers who have to move regardless of rates—job relocations, divorces, estate sales, and downsizing from aging owners who are less sensitive to rate environment than move-up buyers
- Longer days on market accumulating into higher total inventory counts as homes that would have sold in days in 2021–2022 now sit for weeks or months
This means the homes that are available are skewing toward older inventory, new construction with builder incentives, and seller-motivated listings. For patient buyers, this creates negotiating leverage that simply didn't exist two years ago—particularly on price reductions, closing cost contributions, and mortgage rate buydowns that sellers are increasingly offering.
The Affordability Math: Has It Actually Improved?
Here's the complicating factor: even with flat prices and more inventory, affordability has improved only modestly because mortgage rates remain elevated. A 30-year mortgage at 6.38% on a $360,000 home requires about $2,250 per month in principal and interest—still a historically high payment-to-income ratio for median-income households.
However, income growth has been outpacing home price growth nationally in 2026—for the first time in several years. When wages rise faster than home prices, the affordability ratio improves even if the absolute dollar amounts remain challenging. In markets where prices are declining (much of the South), combined with modest income growth, affordability has improved meaningfully from its 2022–2023 peak.
"The market is in a holding pattern. Rates won't let prices run up the way they did in 2021, but the lock-in effect won't let supply increase enough to push prices down meaningfully either. We're essentially stuck sideways until one of those forces changes." — National Association of Realtors economist, June 2026
What This Means If You're Buying, Selling, or Waiting
If you're buying: The best conditions in years exist in the South and Mountain West, where inventory is up, prices are flat or declining, and sellers have more motivation to negotiate. In the Northeast, supply remains tight and prices are still rising—harder conditions, but also less downside risk if you buy and rates eventually fall and allow refinancing.
If you're selling: Pricing realistically matters more than it has in years. Overpriced homes are sitting. Homes priced at or slightly below market are still selling. If you need to sell in the next 12 months, pricing aggressively from day one will outperform chasing the market down over multiple price cuts.
If you're waiting: The calculus depends on your market. In declining markets, waiting for further price drops has logic. In the Northeast and constrained Midwest metros, prices are unlikely to fall meaningfully—every month you wait is a month of continued high rent with no equity accumulation. The 30-year fixed at 6.38% is lower than it was at its 6.59% recent peak—and if rates do eventually fall, you can refinance into a lower payment without losing the purchase price advantage of buying during a soft market.
