Home Price Growth Slows Again as Housing Market Finds Balance

Home price growth cooled again in November, signaling that the U.S. housing market is continuing to adjust after several years of rapid increases. The latest Home Price Index (HPI) report from First American shows that price gains remain modest, while affordability is slowly improving for buyers.

The data suggests the market is settling into a slower, more stable phase. Prices are no longer rising at the pace seen during the pandemic boom, and in some areas, prices are starting to flatten or decline.

Key Takeaways From the November HPI Report

• Annual home price growth stayed below 1% for the fourth month in a row.
• A previous monthly estimate was revised lower, confirming weaker momentum.
• Median household income has risen 3.1% over the past year and 58% since 2015.
• Home prices, adjusted for inflation, are 25.9% higher than in 2000.
• Unadjusted prices are 63.2% above the 2006 peak, though inflation-adjusted prices remain 11.8% below that level.

Housing affordability reached its best level since mid-2022 in October and improved year over year for the ninth straight month. Even so, affordability is still more than 60% worse than pre-pandemic averages, showing how far the market still has to go.

Affordability Is Improving, Slowly

The sharp rise in home prices followed by higher mortgage rates dealt a heavy blow to affordability after the pandemic. That pressure has eased somewhat. Incomes are rising, mortgage rates are off their peak, and price growth has slowed.

One key measure driving this shift is months’ supply, which estimates how long it would take to sell all available homes at the current pace. When supply is tight, prices usually rise faster. As supply increases, price growth tends to cool.

This balance is acting like a “price thermostat” for the market, keeping gains in check and giving buyers a bit more breathing room.

What Economists Are Saying

“Home price growth has settled into low single digits as the market adjusts to higher mortgage rates and tighter affordability,” said Mark Fleming, Chief Economist at First American. He added that slower price growth, combined with rising wages, should allow affordability to keep improving over time.

However, he noted that conditions vary widely by location. Some markets are holding firm, while others are seeing prices move lower.

Markets With the Strongest Price Gains

Among large metro areas, price performance differed sharply:

• Pittsburgh: +6.9%
• Warren–Troy–Farmington Hills, MI: +5.4%
• Newark, NJ–PA: +3.6%
• New York metro: +3.3%
• St. Louis: +2.8%

Markets in the Midwest and parts of the Northeast showed more resilience, largely because prices there remain more affordable for first-time buyers. In contrast, some Sun Belt and coastal markets with stretched affordability are seeing weaker results.

Starter Homes Lead the Way

Price gains were strongest in the starter-home tier, especially in more affordable metros. In Pittsburgh, starter-home prices jumped more than 12% year over year, while luxury home prices grew far more slowly.

This trend shows that demand remains strongest where buyers can still find entry-level homes within reach.

Buyer Activity Shows Signs of Life

There was also encouraging news on buyer demand. The Pending Home Sales Index rose to 79.2, up from both the prior month and last year. According to National Association of Realtors, contract signings reached their highest level in nearly three years.

Lower mortgage rates, better affordability, and more inventory appear to be drawing buyers back, especially in the West, where prices have softened the most.

What This Means for 2026

The path of home prices in 2026 will depend on how demand and supply evolve. If new listings and construction keep pace with buyer interest, price growth is likely to stay muted. If demand rebounds faster than supply, prices could heat up again.

For now, slower home price growth and rising incomes are helping the market move toward a more balanced and sustainable footing one that could gradually improve access to homeownership for more Americans. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.