Cotality, a provider of property information, analytics, and data-enabled solutions, released its Home Price Index for December 2025 data Feb. 3, revealing national housing growth continues to cool along with the weather.
In December, annual price growth slowed to just 0.9% — one of the softest rates since the post-Great Recession recovery. This indicates that the market is in a rebalancing phase where strong economic and housing fundamentals are necessary to support local housing demand.
Even as national growth softens, the Midwest and parts of Northeast remain strong due to their relative affordability, diversified job markets and hybrid work dynamics. States such as New Jersey (+5.5%), Illinois (+5.4%), Nebraska (+5.4%), and Connecticut (+5.1%) are among the nation’s strongest performers, with markets like Newark, Allentown, Pa., and Chicago recording gains that run counter to the broader cooling trend.
New Jersey was one of seven states that reached new high home price growth as of December. The others were Pennsylvania, Delaware, Nebraska, Louisiana, Indiana and Mississippi.
“We are seeing a significant departure from the rapid surges of recent years; while the upward pressure on prices remains, the momentum has moderated enough to suggest that the market is finally becoming more navigable for prospective buyers,” said Cotality Chief Economist Dr. Selma Hepp.
Negative home price growth is dominating the South and the West — including Florida, Texas, Colorado, Washington D.C., Hawaii, Arizona, Utah, Oregon, and California — reflecting the pressure of higher inventory levels and moderating in-migration in markets that previously saw rapid expansion.
An important contributor helping home prices level off are lower mortgage rates. On Feb. 3, the current average interest rate for a 30-year fixed mortgage is 6.22%, according to BankRate. The rate was 6.95% a year ago.
Despite regional differences, current housing market conditions signal a return to a long‑anticipated normalization driven by economic and housing fundamentals. The frantic bidding wars and double‑digit price surges of recent years have given way to a market where buyers and sellers must gradually realign their expectations.
