U.S. Home Prices Rise as Mortgage Rates Hit 7.28%

U.S. home prices rose 1.8% year-over-year in August 2026, but the housing market is losing momentum as mortgage rates climb. Cotality reports that 31 major metropolitan areas recorded negative three-month price momentum in August, signaling a cooling trend. The firm forecasts that annual home price appreciation will slow to approximately 1.3% for the full year.

The market remains sharply divided by region. The Midwest and Northeast continue to see strong growth driven by inventory shortages and relative affordability. Conversely, the Sunbelt and West Coast are facing price declines and higher inventories.

Financial pressures are mounting as Freddie Mac reports the average 30-year fixed mortgage rate has reached 7.28%, leading to a drop in mortgage applications. While these rates have pushed many buyers to the sidelines, those remaining in the market are gaining negotiating power. Homes now spend a median of 61 days on the market, providing more leverage to purchasers.