The U.S. housing market regained momentum in the second quarter of 2026, with home prices rising across a larger share of metropolitan areas as buyers returned despite continued pressure from elevated mortgage rates.
Home prices increased year-over-year in 80% of U.S. metropolitan markets during the second quarter, up sharply from 71% in the first quarter, according to the latest quarterly report from the National Association of Realtors. The report provides quarterly data on median home prices and housing affordability across metro areas, offering a broad view of market conditions for buyers, sellers, agents and the broader real estate industry.
The national median price for an existing single-family home rose 1.5% annually to $434,900, accelerating from the 0.5% year-over-year increase recorded during the first quarter. While price growth remains far below the historic gains seen during the pandemic-era housing boom, the latest figures indicate that the market is stabilizing after a period of slowing activity caused by higher borrowing costs and limited affordability.
“Home sales increased despite mortgage rates rising. This testifies to the potential housing demand building up from steady job and income gains,” said NAR Chief Economist Dr. Lawrence Yun. “Sales rose in three of the four major regions, with the South leading the way due to faster job growth. The Northeast was the exception, held back partly by slower job growth and faster-appreciating home prices, which hurt affordability.”
“It is welcoming to see incomes rising faster than home prices, which has helped boost affordability–but the big short-term challenge to affordability is coming from rising mortgage rates”, Yun said.
Regional housing markets continued to move at different speeds. The Northeast posted the strongest annual price appreciation, with the median existing single-family home price increasing 3.8% to $547,200. The Midwest followed with a 3.6% increase to $340,800, while the South recorded a more modest 1% gain to $380,000. The West remained the nation’s most expensive housing region but was the only area to experience a decline, with prices falling 0.8% year-over-year to $637,900.
The broader market also showed signs of improving stability. Only 20% of metro areas experienced declining home prices during the second quarter, down from 27% in the previous quarter and 24% a year earlier. At the same time, approximately 5% of metro markets recorded double-digit annual price gains, unchanged from the first quarter.
Several smaller and mid-sized markets continued to outperform the national average. Beaumont-Port Arthur, Texas, recorded the largest annual increase among major metro areas, with prices rising 11%, followed by Naples-Immokalee-Marco Island, Florida, at 10.5%, and Gulfport-Biloxi-Pascagoula, Mississippi, at 10.3%. Other strong-performing markets included Syracuse, New York, Hartford-West Hartford-East Hartford, Connecticut, Lansing-East Lansing, Michigan, Canton-Massillon, Ohio, Providence-Warwick, Rhode Island-Massachusetts, York-Hanover, Pennsylvania, and Milwaukee-Waukesha-West Allis, Wisconsin.
The nation’s most expensive housing markets remained concentrated along the West Coast and in high-cost coastal regions. San Jose-Sunnyvale-Santa Clara, California, remained the country’s most expensive metro market, with a median home price of $2.05 million, although prices declined 4.2% from a year earlier. San Francisco-Oakland-Hayward followed at $1.5 million, with prices rising 5.2%, while Anaheim-Santa Ana-Irvine reached $1.49 million, up 3.7% annually.
Other markets with median prices above $1 million included Urban Honolulu at $1.18 million and San Diego-Carlsbad at $1.08 million. Several additional California markets, including Salinas, Oxnard-Thousand Oaks-Ventura, San Luis Obispo-Paso Robles and Los Angeles-Long Beach-Glendale, remained among the country’s most expensive housing markets.
Despite improving conditions compared with last year, affordability remains the biggest challenge facing buyers. The typical monthly mortgage payment for an existing single-family home with a 20% down payment increased to $2,199, up $219 from the previous quarter. However, that payment remains $52 lower than a year ago.
Typical households spent 23.8% of their income on mortgage payments, up from 21.8% in the first quarter, but below the 25.5% share recorded one year earlier. The improvement reflects stronger income growth relative to home-price appreciation, although rising mortgage rates continue to create short-term affordability pressure.
First-time buyers continue to face an even greater financial hurdle. The typical starter home, priced at $369,700 with a 10% down payment, required an estimated monthly mortgage payment of $2,158. First-time buyers devoted 35.9% of their income toward mortgage payments, up from 32.9% in the previous quarter, but down from 38.4% a year earlier.
The second-quarter results suggest the housing market is entering a more balanced phase, with demand gradually returning as employment and incomes support buyers. However, the pace of recovery will likely depend on mortgage rates, inventory levels and whether affordability improvements can continue.
For the remainder of 2026, the U.S. housing market faces a delicate balance: limited housing supply continues to support prices, while elevated borrowing costs remain the primary barrier preventing more buyers from entering the market.
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