State-by-State Breakdown: Which U.S. Housing Markets Are Gaining Ground and Which Are Stalling

Market Dynamics Across America: A 2026 Investor’s Guide

The American real estate landscape has undergone significant transformation since 2020, shaped by pandemic aftereffects, inflationary pressures, and shifting interest rate environments. These macro forces have created vastly different outcomes across the country. While certain markets have emerged as clear winners with substantial property value appreciation, others have stalled or even retreated. For prospective buyers planning moves in 2026, understanding which markets are thriving and which are struggling becomes essential intelligence.

Recent analysis of Zillow’s October 2025 single-family home valuation data across all 50 states reveals pronounced divergence in housing market trajectories. Some regions are experiencing double-digit appreciation gains, while others face negative momentum after two years of activity. This geographical disparity provides a crucial roadmap for anyone timing a home purchase.

The Winners and Losers: Key Market Findings

Eastern Markets Lead the Charge

New Jersey emerges as the nation’s strongest performer with an 11.7% appreciation gain over two years, commanding October 2025 valuations around $578,764 for single-family residences. New York follows closely with 11.6% two-year growth and current average values of $483,605. Connecticut rounds out the top tier at 11.0% appreciation with October 2025 values of $453,495.

Midwest Shows Steady Upward Momentum

Illinois demonstrates remarkable consistency with the nation’s highest one-year growth rate at 4.3%, paired with solid 10.1% two-year appreciation. Average homes trade at $285,028. Indiana, Michigan, and Ohio all show similar patterns—three-year single-digit annual growth translating into 7-9% two-year gains.

West Faces Headwinds

The western states tell a different story. Arizona’s housing market retreated 3.2% over the past year and 2.0% across two years, with October 2025 values at $429,020. California’s market sentiment soured with 2.0% one-year depreciation despite 1.8% two-year gains (current average: $784,364). Colorado and Vermont both experienced 2.2% one-year declines. Texas posted concerning numbers with 2.6% annual and 2.7% biennial depreciation.

Florida, despite its popularity as a relocation destination, showed -5.0% one-year and -4.4% two-year value changes, currently valued at $395,691.

Hawaii’s Outlier Status

Hawaii maintains the nation’s highest absolute values at $959,688 average, though paradoxically showing minimal appreciation. Two-year growth barely registers at 0.1%, while the past year saw 2.1% depreciation—a rare combination of high prices with stagnant momentum.

Regional Variations: The Tucson Housing Market and Southwest Context

The southwestern market, exemplified by Arizona’s struggles including the Tucson housing market, reflects broader regional challenges. Arizona’s negative trajectory contrasts sharply with northeastern recovery patterns. The Tucson housing market specifically faces pressures from rate sensitivity and inventory shifts, mirroring Arizona’s statewide -3.2% annual performance. Buyers in the Tucson housing market seeking appreciation potential may need to look beyond traditional purchase-and-hold strategies or consider longer timeframes.

Budget-Friendly States Show Consistent Gains

For cost-conscious buyers, several affordable states demonstrate solid fundamentals:

• Mississippi leads the affordability roster at $185,741 average value with modest 0.6% annual growth
• West Virginia offers $169,206 valuations with 1.7% annual appreciation
• Louisiana sits at $208,936 with marginal changes
• Kentucky presents $226,256 values backed by strong 4.1% annual growth

These markets offer lower entry barriers alongside steady—if modest—appreciation trajectories.

State-by-State Valuations and Performance Metrics

Northeast Premium Markets:

• New Jersey: $578,764 (2.9% annual, 11.7% two-year)
• New York: $483,605 (4.0% annual, 11.6% two-year)
• Connecticut: $453,495 (3.8% annual, 11.0% two-year)
• New Hampshire: $515,718 (2.6% annual, 9.2% two-year)
• Massachusetts: $667,117 (1.1% annual, 7.1% two-year)
• Rhode Island: $497,634 (2.8% annual, 10.3% two-year)

Midwest Solid Performers:

• Illinois: $285,028 (4.3% annual, 10.1% two-year)
• Indiana: $249,568 (3.1% annual, 7.4% two-year)
• Ohio: $240,764 (3.8% annual, 9.4% two-year)
• Wisconsin: $324,061 (4.2% annual, 9.2% two-year)
• Michigan: $250,225 (3.1% annual, 7.6% two-year)
• Iowa: $231,379 (3.8% annual, 7.5% two-year)
• Kansas: $238,210 (2.6% annual, 7.8% two-year)

South/Border States:

• Texas: $298,410 (-2.6% annual, -2.7% two-year)
• Florida: $395,691 (-5.0% annual, -4.4% two-year)
• Georgia: $332,289 (-2.2% annual, 0.3% two-year)
• Tennessee: $327,566 (-0.2% annual, 2.4% two-year)
• North Carolina: $332,359 (-0.6% annual, 1.8% two-year)

Southwest Context (Including Tucson Housing Market Region):

• Arizona: $429,020 (-3.2% annual, -2.0% two-year)
• California: $784,364 (-2.0% annual, 1.8% two-year)
• New Mexico: $309,935 (1.2% annual, 4.7% two-year)
• Utah: $540,574 (2.2% annual, 3.4% two-year)

Mountain/West:

• Colorado: $549,087 (-2.2% annual, -1.3% two-year)
• Montana: $459,396 (1.0% annual, 4.1% two-year)
• Idaho: $465,211 (0.7% annual, 2.7% two-year)
• Wyoming: $357,954 (3.64% annual, 7.2% two-year)
• Nevada: $461,796 (-0.7% annual, 4.7% two-year)
• Washington: $605,992 (-0.3% annual, 3.1% two-year)
• Oregon: $501,879 (-0.6% annual, 0.4% two-year)
• Alaska: $394,988 (3.3% annual, 5.1% two-year)
• Vermont: $389,844 (-2.2% annual, -1.4% two-year)
• Maine: $397,308 (-0.1% annual, 3.7% two-year)

Affordable Appreciation Zones:

• Kentucky: $226,256 (4.1% annual, 8.5% two-year)
• Arkansas: $216,142 (0.9% annual, 4.1% two-year)
• Oklahoma: $215,920 (1.7% annual, 4.9% two-year)
• Louisiana: $208,936 (-0.2% annual, -2.0% two-year)
• Mississippi: $185,741 (0.6% annual, 1.5% two-year)
• West Virginia: $169,206 (1.7% annual, 7.4% two-year)
• South Carolina: $302,022 (-0.4% annual, 2.3% two-year)
• South Dakota: $312,709 (2.0% annual, 4.9% two-year)
• North Dakota: $283,506 (4.1% annual, 6.8% two-year)

Upper-Mid Markets:

• Pennsylvania: $279,125 (3.1% annual, 6.9% two-year)
• Delaware: $397,929 (2.4% annual, 4.9% two-year)
• Maryland: $440,410 (1.3% annual, 4.1% two-year)
• Virginia: $409,705 (1.8% annual, 6.5% two-year)
• Minnesota: $347,494 (2.5% annual, 3.9% two-year)
• Nebraska: $270,139 (2.9% annual, 6.0% two-year)
• Missouri: $257,063 (2.4% annual, 5.8% two-year)
• Alabama: $228,877 (0.3% annual, 2.0% two-year)

What This Means for 2026 Home Buyers

Aggressive Growth Markets: New Jersey, New York, Connecticut, and Illinois represent markets where appreciation momentum remains strongest. These offer better long-term wealth-building potential despite higher purchase prices.

Value with Stability: Midwest markets present balanced propositions—lower entry costs combined with consistent appreciation. Wyoming, North Dakota, and West Virginia offer outsized annual gains relative to their affordability.

Caution Flags: The Tucson housing market, along with broader Arizona, California, Colorado, and Florida face headwinds. Buyers entering these markets should recalibrate expectations toward longer holding periods or focus on sub-market selection rather than regional betting.

Market Saturation: Hawaii’s premium pricing with minimal appreciation suggests limited upside without dramatic market shifts.

Methodology and Data Foundation

This analysis draws upon Zillow’s comprehensive October 2025 single-family residence (SFR) valuations across all American states. Researchers tracked quarterly changes beginning with October 2023 baseline data, capturing April 2025 mid-point readings, and concluding with October 2025 current valuations. Both one-year (October 2024 to October 2025) and two-year (October 2023 to October 2025) change metrics were calculated for every state. Data collection concluded December 9, 2025, ensuring the most current market snapshot available for prospective purchasers planning 2026 transactions.

Strategic Takeaways

For buyers prioritizing appreciation potential, northeastern and midwestern states demonstrate superior trajectories. For those seeking affordable entry points without sacrificing growth, southern and border states outside the depreciation zones offer compelling value propositions. The Tucson housing market and similar southwestern challenged markets may appeal primarily to long-term holders or those seeking lifestyle moves over investment returns.

As 2026 unfolds, understanding these regional variations becomes the critical differentiator between purchases that build equity and those that merely provide shelter.