Increasing Inventory Drives Home Prices Down Across the US

• Year-over-year price growth continues its downward trend, only rising 1.2% in September 2025.
• Connecticut, New Jersey, Alaska, West Virginia, and Wyoming saw the highest year-over-year price growth this month. Washington D.C. and Florida saw home prices dip the most.
• Despite September’s 0.2% monthly decline, Newark, NJ; Allentown, PA; Albany, NY; Omaha, NE; and Boise City, OK saw monthly increases firm up in September, up about 1% from the prior month.

Cotality™, a leader in property information, analytics, and data-enabled solutions, released its Home Price Index™ for September 2025 data today. In September, price growth was 1.2% year-over-year. Home prices across the country are dropping as inventory reached its highest level since 2019. While the Northeast is still showing strong market signals, other regional differences are becoming apparent.

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Chart 1: National home price growth September 2025 data. Source: Cotality

Northeastern states are maintaining strong housing fundamentals, which has led to continued home price growth in the high single digits. However, western states like Alaska and Wyoming are showing a turnaround and posted home price growth this month. Both states had year-over-year gains above 5%. However, at the metro level, more areas are seeing depressed prices. In September, 20% of the 411 U.S. metropolitan areas saw annual price drops. This is the largest share of metros with declines in price growth since June 2023, when surging mortgage rates significantly cooled home prices.

“Much like the K-shaped trend seen in overall consumer spending—driven largely by higher income groups—lower-income potential homebuyers are facing challenges due to an uncertain job market, sluggish wage growth, and worsening financial conditions. This is leading to weaker demand for homes and downward pressure on prices,” said Dr. Selma Hepp, Cotality’s Chief Economist.

Although recent declines in mortgage rates and the moderation in housing prices have slightly improved affordability, cost remains the primary obstacle for many prospective homebuyers. Notably, 75% of the top 100 housing markets are still considered overvalued, according to Cotality’s HPI. Also, while more for-sale homes offer more options, the 72% increase in real mortgage payments (exclusive of insurance and taxes) puts homeownership out of reach for many.

“Major Northeastern metro areas such as Boston, New York, and Philadelphia remain resilient thanks to sectors like finance, biotech, healthcare, and education. Strong and diversified local job markets continue to draw high-earning professionals and give them the income stability needed to purchase expensive homes. Additionally, many of these regions have nearby, mid-sized metros that are more affordable; these areas are increasingly popular with hybrid workers and high-income commuters seeking better value. Although recent declines in mortgage rates have provided support for housing activity, broader improvements in demand will depend on the strength of the labor market and corresponding consumer confidence.”

The next Cotality Home Price Index will be released on December 2, featuring data for October 2025. For ongoing housing trends and data, visit the Cotality Insights blog: www.cotality.com/insights.

Methodology

The Cotality HPI^™ is built on industry-leading public record, servicing and securities real-estate databases and incorporates more than 45 years of repeat-sales transactions for analyzing home price trends. Generally released on the first Tuesday of each month with an average five-week lag, the Cotality HPI is designed to provide an early indication of home price trends by market segment and for the Single-Family Combined tier, representing the most comprehensive set of properties, including all sales for single-family attached and single-family detached properties. The indices are fully revised with each release and employ techniques to signal turning points sooner. The Cotality HPI provides measures for multiple market segments, referred to as tiers, based on property type, price, time between sales, loan type (conforming vs. non-conforming) and distressed sales. Broad national coverage is available from the national level down to ZIP Code, including non-disclosure states.

Cotality HPI Forecasts^™ are based on a two-stage, error-correction econometric model that combines the equilibrium home price—as a function of real disposable income per capita—with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks like changes in the unemployment rate. With a 30-year forecast horizon, Cotality HPI Forecasts project Cotality HPI levels for two tiers — Single-Family Combined (both attached and detached) and Single-Family Combined Excluding Distressed Sales. As a companion to the Cotality HPI Forecasts, Stress-Testing Scenarios align with Comprehensive Capital Analysis and Review (CCAR) national scenarios to project five years of home prices under baseline, adverse and severely adverse scenarios at state, metropolitan areas and ZIP Code levels. The forecast accuracy represents a 95% statistical confidence interval with a +/- 2% margin of error for the index.

About Market Risk Indicators

Market Risk Indicators are a subscription-based analytics solution that provide monthly updates on the overall health of housing markets across the country. Cotality data scientists combine world-class analytics with detailed economic and housing data to help determine the likelihood of a housing bubble burst in 392 major metros and all 50 states. Market Risk Indicators is a multi-phase regression model that provides a probability score (from 1 to 100) on the likelihood of two scenarios per metro: a >10% price reduction and a ≤ 10% price reduction. The higher the score, the higher the risk of a price reduction.

About the Market Condition Indicators

As part of the Cotality HPI and HPI Forecasts offerings, Market Condition Indicators are available for all metropolitan areas and identify individual markets as overvalued, at value or undervalued. These indicators are derived from the long-term fundamental values, which are a function of real disposable income per capita. Markets are labeled as overvalued if the current home price indexes exceed their long-term values by greater than 10% and undervalued where the long-term values exceed the index levels by greater than 10%.

Source: Cotality

The data provided are for use only by the primary recipient or the primary recipient's publication or broadcast. This data may not be resold, republished or licensed to any other source, including publications and sources owned by the primary recipient's parent company without prior written permission from Cotality. Any Cotality data used for publication or broadcast, in whole or in part, must be sourced as coming from Cotality, a data and analytics company. For use with broadcast or web content, the citation must directly accompany first reference of the data. If the data are illustrated with maps, charts, graphs or other visual elements, the Cotality logo must be included on screen or website. For questions, analysis or interpretation of the data, contact Charity Head at newsmedia@Cotality.com. Data provided may not be modified without the prior written permission of Cotality. Do not use the data in any unlawful manner. The data are compiled from public records, contributory databases and proprietary analytics, and its accuracy is dependent upon these sources.

About Cotality

Cotality accelerates data, insights, and workflows across the property ecosystem to enable industry professionals to surpass their ambitions and impact society. With billions of real-time data signals across the life cycle of a property, we unearth hidden risks and transformative opportunities for agents, lenders, carriers, and innovators. Get to know us at www.cotality.com.

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"Although recent declines in mortgage rates have provided support for housing activity, broader improvements in demand will depend on the strength of the labor market and corresponding consumer confidence." -Dr. Selma Hepp, Chief Economist at Cotality