Housing Market Slows, But Home Prices Continue Rising in Most U.S. Cities

 

 

   

The housing market has clearly shifted from the rapid pace we saw in previous years, but that doesn’t mean home values are collapsing. In fact, 73% of metro areas across the country still posted price gains in the final quarter of 2025. That’s an important reminder that while activity has slowed, prices in most markets are still holding steady or rising.

Some of the strongest appreciation happened in more affordable markets. Cape Girardeau, Missouri–Illinois led the way with nearly 20% year-over-year growth, bringing its median home price to $275,000. Cumberland, Maryland–West Virginia followed with a 17.1% increase and a median price just under $175,000. Owensboro, Kentucky saw a 15% gain, with a median price of $264,000. These markets remain well below the national median home price, which rose 1.2% to $414,900 in the last quarter of 2025.

There was also some encouraging news for buyers. Monthly mortgage payments on a typical single-family home decreased 5.7% to $2,057 as rates eased slightly. That improvement, combined with moderating inflation, has helped bring some sidelined buyers back into the market. However, affordability still depends heavily on income and preparation. Based on a 20% down payment and a 30-year mortgage rate around 6.1%, buyers would need annual household incomes of approximately $53,000 in Cape Girardeau, $34,000 in Cumberland, and $51,000 in Owensboro to stay within the recommended 30% housing cost threshold, not including taxes and insurance.

Not every market experienced growth. Prices declined most significantly in Elmira, New York; Farmington, New Mexico; and Boulder, Colorado, with drops ranging from roughly 6% to 7%. These declines highlight an important truth about real estate: it is always local. National trends provide direction, but individual markets can behave very differently depending on supply, demand, and economic conditions.

So why haven’t prices fallen more broadly if sales activity has slowed? The answer comes down to supply and equity. Inventory remains relatively tight in many parts of the country, and homeowners still have strong equity positions. In several areas, income growth has even outpaced home price growth. When supply remains constrained, prices tend to show resilience, even during slower sales periods.

Will buyers see meaningful relief soon? Possibly, but it is expected to happen gradually. Slightly lower mortgage rates and modest affordability improvements are helping, but long-term relief will likely depend on increasing housing supply, especially in the starter-home segment. Until inventory expands in a meaningful way, upward pressure on prices will likely continue in many areas, even if interest rates ease.

From a Chicago perspective, this national trend mirrors what we’re seeing locally. Buyers are more selective and price-sensitive, but well-prepared homes that are priced correctly are still moving. Sellers can no longer rely on momentum alone; strategy, presentation, and positioning matter more than ever. At the same time, buyers who understand their numbers — mortgage rates, income requirements, and down payment options — are finding opportunities where others hesitate.

This market isn’t crashing, and it isn’t booming. It’s stabilizing. And in a stabilizing market, preparation and strategy separate successful buyers and sellers from everyone else. If you’re thinking about making a move in Chicago or the surrounding suburbs, the smartest step isn’t reacting to headlines — it’s understanding your local numbers and building a plan around them.