Homes.com: February Home Prices Rise, but Growth Slows
Homes.com, a subsidiary of CoStar Group and one of the leading online residential marketplaces in the United States, has released a new report analyzing home prices for the month of February. The report is based on collected data and provides key insights into the current state of housing prices. While home prices continue to rise, the rate of increase has slowed compared to previous months. The analysis explores the implications of this moderation for homebuyers and identifies the regions experiencing the highest price appreciation.
According to the preliminary findings, home prices in February increased by 2.7% compared to the same period last year. This marks the second consecutive month in which the pace of price growth has declined. In January, prices rose by 4.1%, while in December, the increase reached 5.6%. In dollar terms, the median home price increased by $10,000 over the past year, moving from $365,000 in February 2024 to $375,000 in February 2025. This marks the 20th consecutive month of year-over-year price growth, with annual price increases peaking at 5.6% in December.
Despite the continued rise in home prices, the slowing rate of appreciation is coupled with an increase in the number of homes available for sale. This shift in market conditions suggests that homebuyers may have greater leverage in negotiations, potentially signaling a transition from a seller’s market to a more balanced or even buyer-friendly market.
Regional Price Trends: Northeast and Midwest Lead Gains
The Homes.com report highlights regional disparities in home price appreciation. The highest price increases were concentrated in the Northeast and Midwest, while the South experienced relatively modest growth. Among the ten markets with the largest price gains, four were in the Northeast, and four were in the Midwest. New York led the nation with an 11% increase in home prices over the past year, followed by Detroit, Providence, and Chicago.
By contrast, the Southern region had only one city, Miami, among the top ten markets with the largest price gains. However, it dominated the list of cities with the lowest price increases. The report also identified four metropolitan areas where home prices declined year-over-year. San Francisco experienced the largest decrease, with an 11% drop in home prices. Other cities seeing declines included Norfolk, Tampa, and Charlotte.
Implications for Homebuyers and Sellers
The slowdown in price appreciation, coupled with increased housing inventory, is a positive development for potential homebuyers. A slower rate of price growth could make homeownership more accessible, especially for first-time buyers who have faced affordability challenges in recent years. Additionally, an increase in available homes provides buyers with more options and greater bargaining power in negotiations.
For sellers, the market shift means that pricing strategies will become increasingly important. While demand for homes remains strong, sellers may need to be more competitive with their pricing and offer attractive terms to appeal to buyers. The days of rapid bidding wars and homes selling far above the asking price may be diminishing in certain markets.
Market Dynamics and Economic Factors
Several economic factors are influencing the current housing market trends. Interest rates, inflation, and overall economic stability play significant roles in shaping home prices. In recent months, mortgage rates have remained relatively high, which has impacted affordability and slowed price growth. Additionally, economic uncertainty has led some potential buyers to adopt a wait-and-see approach, further tempering demand.
Despite these factors, the long-term outlook for the housing market remains positive. Population growth, urban migration trends, and a shortage of new housing supply continue to support home values. However, regional variations mean that market conditions will not be uniform across the country.
