The idea of a single “national housing market” is more shorthand for economists and analysts than reality. Real estate is, and always will be, local.
The situation will depend on factors such as employment growth, migration patterns, new construction, local zoning, and even neighborhood-level inventory. All of these factors can vary significantly from metro (or zip code) to metro (or zip code).
Even if there appears to be a national slowdown, it may be hiding a mix of regional stories. Some markets remain competitive with tight inventories and quick sales, while others are experiencing longer days on market, lower prices, and weaker demand.
To better understand these differences, Construction Coverage researchers recently developed a composite score that ranks local real estate markets using key metrics from Redfin data.
This analysis incorporates year-over-year changes in median sales price (2024-2025), percent of homes sold above asking price (2025), median days on market (2025), average sales price-to-list price ratio (2025), and percent of homes sold at reduced prices (2025). This analysis provides a more nuanced view of where demand is strongest and where momentum is starting to wane.
Sunbelt waves weaken and coastal strength returns
Analysis shows that housing momentum is decisively shifting to the Northeast, where supply constraints are increasing competition.
Currently, seven of the 10 hottest state-level markets in the nation are located in this region, led by Connecticut with an overall score of 93.9. New Jersey (89.), Rhode Island (87.8) and New York (86.9) follow. This highlights how persistent inventory shortages are sustaining demand even as broader conditions soften.
California also still ranks firmly at the top, with a score of 62.9, despite its high cost of living. Several northern cities, including San Francisco, San Jose, and Oakland, rank among the hottest metropolitan markets, in part because it remains difficult to add new supply.
In both the Northeast and California, structural constraints such as dense urban development patterns and restrictive zoning continue to limit new construction, causing inventory to tighten and prices to soar.
However, describing a state-level market like New Jersey as “hot” may be a bit of a misnomer. The Garden State housing market sent clear signals in February 2026, with activity slowing but prices not slowing down, according to the New Jersey Real Estate Network. Contracted sales decreased 11.3% and inventory decreased 1.1% year-over-year, but median sales price still rose 5.4%.
For New Jersey buyers and sellers, this means no real cool down. Demand remains, but affordability pressures and limited supply prevent deals from happening. Higher-priced, better-looking homes continue to see significant appreciation, especially in narrow segments.
Bottom line: New Jersey remains a price-resilient market, but it’s much more selective. Buyers are cautious and focused on paying, but sellers need sharper pricing and strategy to win.
By contrast, many once-booming markets in the South and Mountain West are losing momentum. Cities like Arlington, Texas, that have seen a surge in waves of pandemic-era immigration. Fort Worth, Texas. and Austin, Texas, plummeted in the rankings, dropping from the top 15 in 2021 to last place in 2026.
A similar reversal is occurring in Arizona. Phoenix and Mesa, which was one of the most competitive markets in the country just a few years ago, has fallen near the bottom. In these areas, a combination of rapidly rising prices, rising mortgage rates, and changing back-to-office mandates are dampening demand and eroding the affordability advantages that initially attracted buyers.
Redfin said Phoenix’s housing market remains somewhat competitive, but momentum has slowed. On average, homes receive about 1 offer and sell within about 62 days. The median sales price fell 2.4% year over year to $461,000 last month, and the price per square foot fell 3.1% to $280 per square foot.
This shift signals a softening in pricing despite continued demand, with buyers having more time to push valuations lower.
An example of a cooling Sunbelt market
North Carolina’s housing market is a case in point. The Tar Heel State ranked 42nd in the construction coverage analysis with an overall score of 29.4.
Ryan Fitzgerald, owner of Raleigh Realty, says the Raleigh, N.C., market is entering a more balanced phase after several years of intensity during the pandemic. But while activity has slowed compared to the pace from 2021 to 2023, Raleigh has largely avoided the sharp economic downturn seen in markets such as Austin, Texas, and Jacksonville, Florida, he said.
“We are no longer in a bidding war environment where homes go under contract within 48 hours with waived contingencies and all-cash offers,” Fitzgerald told Inman. “However, affordable housing in desirable areas continues to sell steadily.”
Over the past year, trading structures have also normalized, Fitzgerald said. The buyer conducts another full inspection, the appraisal contingency reoccurs, and the seller is negotiating repairs. This is in stark contrast to the “take it or leave it” dynamic of the previous cycle.
He said pricing has also become more important. Substandard homes remain on the market longer and often require a reduction to attract interest.
Looking ahead, Fitzgerald expects the market to remain stable until the end of 2026, with mortgage rates remaining the key variable. Rising interest rates may force some buyers to act quickly to secure financing, while also potentially alienating more price-sensitive households.
“Raleigh has strong fundamentals that protect it from facing a more severe recession, including a lot of corporate relocation activity, a rapidly growing technology industry, several well-respected universities, and continued population growth,” Fitzgerald said.
Inventory, not geography, defines the market
According to some, the housing narrative of 2026 is shifting away from the “hot sunbelt vs. cool coast” paradigm that has been common in recent years.
Rather, a real dividing line is emerging between markets with limited inventory and those still digesting the rapid price increases of the pandemic years, according to Ben Mizes, president of Clever Real Estate.
Mortgage rates skyrocketed in the weeks following the escalation of the Iran conflict, wiping out about $25,000 in purchasing power for the typical American homebuyer. Even in markets where inventories have improved, rising borrowing costs continue to limit purchasing power and reshape demand patterns across the country.
The changes are especially noticeable in the once deep red South metro. “Other states are in this situation to varying degrees, but Texas ranks last in our construction coverage analysis, and Austin and San Antonio rank near the bottom for large cities, indicating soft demand due to rapidly rising home prices,” Mises told Inman.
Conversely, a market with persistent supply constraints and a resilient job market may still appear “hot” even when the economy is weak in other parts of the country, he said. This partly explains why some expensive coastal cities have new strength despite high interest rates.
“We expect the rest of 2026 to be very localized,” Mizes said. “Markets where inventory growth and affordability are the primary constraints will tilt towards buyers. Markets suffering from supply shortages will continue to lead the way and compete in the absence of broad national recovery or growth.”
Mises said the common thread across all markets is constraints. Rising mortgage rates are expected to suppress both inventory and transaction volumes, and the overall housing economy is expected to be locked into a period of weak sales and movement restrictions, although regional conditions continue to vary.
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