WASHINGTON — U.S. home price growth slowed sharply in February, with annual gains falling to 0.5% and prices slipping on a monthly basis, signaling a cooling housing market ahead of the spring buying season, according to data from Cotality.
Cotality said its Home Price Index showed prices declined 0.16% from January, reflecting softer demand following the pandemic-era surge and a muted finish to 2025.
Regional performance varied, with the Midwest and Northeast showing relative strength. States including New Jersey, North Dakota and Illinois led annual appreciation, supported by affordability and job growth in higher-wage sectors such as biotech, financial services and energy, according to the report.
Cotality reported:
- New Jersey home prices rose 5.93% year over year
- North Dakota increased 4.92%
- Illinois climbed 4.83%
Metro-Area Performance
Among large metro areas, Newark, New Jersey, posted a 6.7% annual gain, followed by Rochester, New York, at 6.3%.
Seven states, including Rhode Island and Idaho, reached new price peaks in February, while 13 states and Washington, D.C., recorded annual declines. The largest drops were:
- Washington, D.C., down 3.01%
- Florida, down 2.30%
- Montana, down 1.52%
Cotality said parts of Florida have faced continued pressure from rising insurance costs and weakening demand, particularly in the condominium market.
70% are Overvalued
The firm also found that 70 of the 100 largest U.S. metro areas remained overvalued in February — defined as prices exceeding long-term fundamentals by more than 10% — down from 83 a year earlier.
Markets along Florida’s Atlantic coast were identified as having among the highest risks for price declines over the next 12 months.
“These diverse trends indicate an ongoing process of price discovery … and underscore a market that is rebalancing locally rather than correcting nationally,” Selma Hepp, Cotality’s chief economist, said in a statement.
Hepp added that while falling mortgage rates earlier this year raised expectations for a rebound, a recent increase in rates has dampened demand and reduced the likelihood of a broad recovery in 2026.
The Look Ahead
Cotality is projecting national home prices will rise 4.7% year over year by February 2027.
Other housing data points to a similarly modest pace of growth. Figures from the National Association of Realtors showed low single-digit annual price increases in February, while Zillow data indicated roughly 2% year-over-year gains and a slight increase in new contracts despite volatile mortgage rates.
