There are certain markets where housing fundamentals are still solid and are sustaining further increases in home prices, especially in the Northeast and the Midwest. The relative affordability of states like South Dakota and West Virginia keeps them appealing. Prices are rising as a result of people being persuaded to relocate to these states. Home prices increased 5.7% in West Virginia and 6.2% in South Dakota.
“July’s decline in home prices is atypical—the last two periods where we saw monthly declines in July was in 2022 and during 2006-2008 period—but this year’s decline follows a year of relatively flat home prices and persistent weakness in homebuying demand,” Cotality’s Chief Economist Dr. Selma Hepp explained. “And even though price weakness has spread across more markets, 50% continue to see prices increase. The markets where prices are increasing tend to be more affordable markets in Midwest, such as the Chicago metro; Indianapolis; Cleveland; Tulsa, OK; and Louisville, KY; as well as Philadelphia and the New York metro. At the same time, Florida markets and those in the West continue to see persistent price declines.”
For-sale inventory is increasing nationwide. Even though this gives consumers more options, many still find affordability to be a barrier. According to Cotality data, homebuyers now need $200,000 more than they did ten years ago in order to close on a median-priced home. However, compared to the previous year, there are more pending sales now. However, because buyers and sellers have different expectations, these transactions are more challenging to complete and can even fail.
More homes are selling for less than their asking prices in several regions, such as Los Angeles and Washington, D.C. Home prices in these two markets fell overall as well. Between June and July 2025, Los Angeles witnessed a decline of -0.03%, and between July 2024 and July 2025, Washington, D.C., saw a decline of -0.2%. Half of the 100 largest metropolitan areas saw a decline in property values in July. According to Cotality data from 2015 to 2019, prices typically increase by 0.4% in July.
Investors are being encouraged by these recent price declines. When compared to prior years, investor activity is still high this year, accounting for around one-third of all property acquisitions made in the United States. A decrease in owner-occupied transactions is primarily responsible for the market’s increased percentage of investor purchases, and these high levels are anticipated to be consistent until the end of 2025.
The median sales price for single-family houses last month was $405,000, indicating that although price hikes have slowed, home expenses are still rising. The rate of home price growth is currently less than inflation, despite the fact that the national median is still high. As a result, more potential buyers are able to enter the real estate market as home affordability steadily improves.
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