US housing slowdown leaves buyers squeezed between high prices, rents and down payments

The US housing market is cooling, but the path to homeownership is not getting much easier for buyers and would-be buyers.

Home price growth slowed again in February 2026, with national annual gains easing to 0.7%, down from 0.8% in January according to this week’s release of the S&P Cotality Case-Shiller Home Price Index. While that marks another step away from the rapid appreciation seen in previous years, affordability remains strained by high borrowing costs, elevated prices, down payment hurdles and a rental market that still leaves many households with limited room to save.

The latest figures show that major cities are still performing better than the wider market, with the 10-City composite up 1.5% year over year and the 20-City index rising 0.9%. But the broader picture is one of weaker momentum and an uneasy standoff between sellers and buyers.

“Sales remain low, inventory is slowly rising, and prices are stalling — all classic markers of a mismatch between list prices and willingness to pay,” says Thom Malone, principal economist at Cotality. “Many homeowners are still ‘locked in’ to low mortgage rates from the early 2020s, allowing them to wait for buyers to meet their price. However, this patience will have an expiration date. As property taxes and insurance costs climb, or life circumstances force a move, the pressure to sell will build. This spring is a critical test. Sellers who sat out last year are relisting, and we may finally see the desperation required to trigger meaningful price cuts.”

That mismatch is being felt by prospective buyers. Gallup reported that just 25% of non-homeowners expect to buy a home within five years, the lowest level it has recorded since it began tracking the question in 2013. Another 28% expect to buy within 10 years, while 45% do not expect to buy in the foreseeable future.

The pullback is especially notable among younger adults. Gallup found that among non-homeowners aged 18 to 34, only 29% in 2025 and 2026 expected to buy within five years, down sharply from 57% in 2013 and 2015.

Reaching out for help

Even among those who do buy, financial support is increasingly important. LendingTree’s 2026 Mortgage Down Payment Survey found that 40% of homeowners received help with the down payment on their current home, up from 35% in 2023. The reliance is far higher among younger owners, with 78% of Gen Z homeowners and 56% of millennials receiving help.

For many, that assistance was decisive. LendingTree found that 35% of those who received down payment help said they could not have bought when they did without it. Among those who received assistance, 43% said it helped them qualify for a mortgage, while 33% said it reduced their monthly payment.

Renters hoping to save for a purchase are also facing a complicated backdrop. Apartment List reported that the national median rent rose 0.5% in April to $1,370, the third straight monthly increase as the market entered the busy summer moving season. While rents were down 1.7% from a year earlier and 5% below their 2022 peak, they remained 20% higher than at the start of 2021.

That means renters may be seeing some relief from peak levels, but not enough to erase the pressure built up over the past several years. Apartment List also reported that units were taking 35 days on average to lease after listing, five days longer than a year earlier, pointing to softer rental demand but still-elevated housing costs.

Regional variations

Regional differences are widening across both ownership and rental markets. Cotality said Chicago led home price growth with a 5% annual gain, followed by New York at 4.7% and Cleveland at 4.2%. Meanwhile, Denver and Tampa saw prices decline by roughly 2% from a year earlier.

Apartment List similarly found that rent declines were concentrated in Sun Belt markets, with Austin posting the steepest annual drop among large metros at 5.7%. The report linked softer rental conditions in several markets to heavy multifamily construction.

Despite the cooling, buyers are not necessarily expecting bargains. Gallup found that 65% of Americans expect local home prices to rise over the next year, while 67% say now is a bad time to buy a house. Only 29% say it is a good time.

For sellers, the question is whether patience will hold. Cotality’s data showed a 0.3% monthly price increase in February, above the 0.2% average for the month between 2015 and 2019, suggesting that demand has not disappeared. But homes are taking longer to sell, and buyers are increasingly constrained by financing costs and savings gaps.

The result is a market that is no longer racing higher but is still difficult to enter. Slower price growth may help over time, but the combined burden of down payments, mortgage rates, rents and limited inventory continues to keep many would-be buyers on the sidelines.

For now, the most likely path is a gradual thaw rather than a sharp reset. Sellers may eventually need to accept lower prices, while buyers may need improved financing conditions or stronger savings before they return in larger numbers. Until then, the housing market remains stuck between cooling prices and persistent affordability stress.