U.S. Home Price Growth Slows to 1.2% in September 2026, Marking Weakest September Pace Since 2011
U.S. home prices continued to increase in September 2026, but annual growth slowed to its weakest September pace since 2011, according to the latest Home Price Index (HPI) report from First American Data & Analytics. National home prices rose 1.2% year over year, reflecting a housing market facing persistent affordability challenges, higher mortgage rates and limited movement among existing homeowners.
First American Data & Analytics, a national provider of property information, risk management and valuation solutions, released its September 2026 report to provide an updated assessment of residential property price trends across the United States. The company operates as a division of First American Financial Corporation (NYSE: FAF).
The HPI tracks changes in home prices at the national, state and metropolitan levels, providing insights into housing market performance with data available less than four weeks behind real time. The report also examines price movements across starter, mid-tier and luxury housing segments, helping identify differences in market conditions for buyers at various price levels.
Although annual home price appreciation has slowed, prices continued to rise across all three price tiers, indicating that the market has not shifted to broad-based price declines.
Mortgage Rates Continue to Influence Housing Market Conditions
Mark Fleming, chief economist at First American, said annual home price growth had fallen to its weakest September level since 2011. However, he noted that prices continued to increase across the starter, mid-tier and luxury segments.
The recent rise in mortgage rates could place additional pressure on housing affordability while reinforcing the rate lock-in effect among existing homeowners. When mortgage rates increase, homeowners with lower-rate mortgages may be reluctant to sell their properties because purchasing another home could require taking on a significantly more expensive loan.
This reluctance can reduce the number of homes available for sale and limit the supply of properties entering the market. At the same time, higher borrowing costs can discourage prospective buyers by increasing monthly mortgage payments and reducing the amount they can afford to borrow.
The combination of constrained demand and limited housing inventory continues to influence price movements. While higher rates can weaken purchasing activity, the reduced availability of homes may help prevent prices from falling significantly.
According to Fleming, homeowners who choose to remain in their current properties rather than enter a higher-rate market continue to provide underlying support for home prices.
First American Examines Three Housing Price Tiers
The September 2026 HPI report provides a detailed view of residential property trends by dividing metropolitan housing markets into three price categories.
The starter-home tier represents properties priced within the bottom third of the local market’s home-sale price distribution. These homes typically serve buyers seeking more affordable entry points into homeownership.
The mid-tier category covers properties within the middle third of the local price distribution, representing the central segment of the housing market.
The luxury tier includes homes priced within the top third of the local market distribution. These properties generally cater to higher-income buyers and households with greater financial resources.
First American calculates these segments using local market sales data, allowing analysts to compare price movements across different housing categories rather than relying exclusively on overall metropolitan averages.
Price-tier data are available at the national and state levels, as well as for the 50 largest Core-Based Statistical Areas (CBSAs) tracked by the company. This approach helps identify how affordability pressures, financing conditions and buyer demand vary across markets.
Luxury Homes Outpace Starter Properties in Most Major Markets
The report highlights a notable difference in price appreciation between luxury properties and starter homes. According to Fleming, luxury home price growth exceeded starter-home price growth in approximately 70% of the major markets monitored by First American.
This divergence reflects the different financial circumstances of buyers across housing segments.
Starter-home buyers often face tighter budget constraints and depend more heavily on mortgage financing. When interest rates rise, the resulting increase in monthly payments can significantly affect their purchasing power. Buyers may respond by delaying purchases, reducing their budgets or searching for smaller properties.
Luxury-home buyers, by comparison, are generally less constrained by borrowing costs. Some have greater financial reserves, larger down payments or the ability to purchase properties with less dependence on mortgage financing. As a result, higher interest rates may have a smaller impact on their purchasing decisions.
These differences can help explain why luxury properties are experiencing stronger price growth than starter homes across many major metropolitan areas.
However, the trend does not mean that demand for entry-level housing has disappeared. The long-standing shortage of affordable homes continues to provide support for starter-home prices, even as affordability challenges limit the pace of appreciation.
Housing Affordability Remains a Major Challenge
The relationship between mortgage rates, housing supply and buyer purchasing power remains central to the outlook for the U.S. housing market.
For first-time buyers and households seeking lower-priced properties, higher financing costs can make homeownership increasingly difficult. Even when home price growth slows, monthly mortgage payments may remain elevated because of borrowing costs.
Limited inventory also creates challenges for prospective buyers. Homeowners who secured mortgages at lower interest rates in previous years may be reluctant to sell, reducing the number of available properties and restricting opportunities for households looking to move.
This dynamic can create a market in which affordability remains under pressure despite slower annual price appreciation.
For sellers, the decision to move may involve weighing the benefits of selling against the expense of financing a replacement property. For buyers, the combination of home prices, mortgage rates and limited choices can make purchasing decisions more complex.
National and Local Data Provide Market Insights
First American’s HPI offers housing professionals, investors and market participants a way to monitor price movements across different geographic areas and property segments.
By tracking prices at national, state and metropolitan levels, the report provides a broader understanding of regional housing conditions. Its price-tier analysis adds further detail by showing how starter, mid-tier and luxury properties respond differently to changing market conditions.
The September 2026 findings indicate that U.S. home prices remain on an upward trajectory, although appreciation has slowed considerably compared with previous periods.
With national prices rising 1.2% year over year and luxury-home growth outpacing starter-home growth in roughly 70% of major markets, affordability and mortgage financing continue to shape the housing landscape.
As mortgage rates and housing inventory influence decisions by buyers and sellers, the coming months will remain important for understanding the direction of residential property prices across the United States.
