The S&P CoreLogic Case-Shiller Home Price Index released today tells a story that would have seemed impossible just two years ago: the once-scorching Sun Belt real estate markets are cooling rapidly, while traditionally slower Northeastern metros are posting some of the strongest gains in the country.

The Numbers Tell a Striking Story

The national home price index decreased to 338.25 points in September from 339.99 points in August, signaling that the broader market is entering a new phase of slower—and in some cases negative—price growth. The 20-City Composite Index rose just 1.4% year-over-year, the slowest pace of growth since July 2023 and a dramatic deceleration from the double-digit gains that characterized the pandemic housing boom.

But the headline numbers mask a remarkable geographic divergence that's reshaping the American housing landscape.

The Sun Belt's Unexpected Reversal

Markets that attracted millions of pandemic-era migrants seeking lower taxes, warmer weather, and more affordable homes are now experiencing the hangover from unsustainable price growth:

  • Phoenix: Down 2.0% year-over-year, the sharpest decline among major metros
  • Dallas: Falling 1.3%, a stunning reversal for Texas's red-hot market
  • Miami: Also down 1.3%, despite continued population inflows
  • Tampa: Posted the weakest positive return at just 0.4%

These Sun Belt markets share common challenges: a surge of new construction that's finally catching up to demand, affordability constraints that have priced out local buyers, and insurance costs that have skyrocketed in hurricane and wildfire zones.

The Northeast's Quiet Renaissance

Meanwhile, established markets in the Northeast and Midwest—long dismissed as stagnant—are experiencing a resurgence:

  • Chicago: Up 5.5%, leading all 20 metros
  • New York: Gaining 5.2%, defying predictions of an urban exodus
  • Boston: Rising 4.1%, driven by tight inventory and strong job markets
  • Cleveland: Posting solid gains as affordability attracts buyers

"Current conditions suggest more persistent headwinds. With mortgage rates stubbornly elevated and affordability at multi-decade lows, the market appears to be settling into a new equilibrium of minimal price growth—or, in some regions, outright decline."

— Nicholas Godec, S&P Dow Jones Indices

What's Driving the Divergence?

Several factors explain why formerly hot markets are cooling while previously sleepy ones heat up:

Supply Dynamics

Sun Belt builders ramped up construction during the boom years, and that inventory is now hitting the market just as demand softens. In contrast, restrictive zoning and limited land in Northeastern metros have kept supply constrained, supporting prices even as mortgage rates remain elevated.

Insurance and Climate Costs

Homeowners in Florida, Texas, and Arizona face soaring insurance premiums—in some cases doubling or tripling over the past two years. These carrying costs effectively raise the total cost of homeownership, dampening demand and putting pressure on prices.

The Return-to-Office Effect

The remote work revolution that fueled Sun Belt migration has partially reversed. With more companies mandating in-office attendance, proximity to major employment centers—often in coastal cities—has regained importance.

What This Means for Buyers and Sellers

For prospective homebuyers, the data suggests patience may pay off in Sun Belt markets, where declining prices and rising inventory could create better buying opportunities in 2026. However, Northeastern buyers face continued competition and tight supply.

For sellers, the message is more sobering in markets like Phoenix and Dallas: the days of receiving multiple over-asking offers are over. Realistic pricing and flexibility on terms will be essential for successful transactions.

The Six-Month Picture

Perhaps most telling is the trailing six-month data: national home prices have risen just 0.4% over that period. Only seven of the 20 metros tracked by Case-Shiller—Chicago, Cleveland, Minneapolis, Boston, New York, Charlotte, and Atlanta—posted positive appreciation over the past half-year.

That's a far cry from the pandemic-era frenzy, and it suggests that the American housing market is entering a prolonged period of price moderation, with significant regional variation determining whether individual homeowners see gains or losses in their most important asset.