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Home prices continue to rise at a steady pace. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, which measures the price of existing homes across the nation, rose 1.4% in November from a year earlier, the same gain as the previous month. On a month-over-month, seasonally adjusted basis, home prices rose 0.4%. While affordability challenges continue to weigh on demand, a relatively low supply of homes for sale is supporting continued price growth. Chicago reported the strongest price gains over the year, followed by New York and Cleveland. At the other end of the market, prices fell 3.9% in Tampa and 1.4% in Dallas and Phoenix.
Housing starts will likely find a floor early this year. 2025 was tough for home builders, as buyers remained on the sidelines for much of the year due to poor affordability. Heading into 2026, builders continue to deal with high financing costs, elevated economic uncertainty and unfavorable supply conditions owing to volatile U.S. trade policy under the Trump administration. Mortgage rates have stayed near 6% since the start of the year, which should help bring some buyers back to the market.
New-home sales will continue rising in 2026, reflecting lower mortgage rates and financial incentives from home builders. The Mortgage Bankers Association’s Builder Application Survey data for December show mortgage applications for new-home purchases rose 2.5% from a year ago. New-home sales rose to a seasonally adjusted pace of 640,000 units in December, up about 7% from a year ago, the MBA estimates.
Existing-home sales rose in December as buyers responded to the drop in mortgage rates. Sales of previously owned homes jumped 5.1%, to 4.35 million annualized units. Higher sales are putting a dent in inventory levels, which are now 11.6% below prepandemic levels and remain historically low. The monthly drop in single-family inventory brought the months-of-supply level to 3.3 months at the current sales pace in December, down from 4.2 in November.
