Housing Market Pulse: How Your State Stacks Up in 2025-2026

The U.S. housing landscape continues its unpredictable dance through late 2025. From record-breaking price tags in island paradises to unexpected declines in once-hot markets, the real estate picture varies dramatically depending on geography. Understanding these regional disparities is critical for anyone considering a home purchase in the coming year.

The Big Picture: Winners and Losers Across America

Recent market data from October 2025 reveals a tale of two housing markets. While some states are witnessing consistent appreciation, others are caught in a correction phase. The pandemic era volatility—combined with inflation pressures and elevated mortgage rates—has created an environment where location decisions carry outsized importance.

New Jersey emerged as the standout performer over the past 24 months, with home values climbing 11.7% since October 2023. Illinois has captured attention for its recent momentum, posting a 4.3% yearly gain. Conversely, states like Texas experienced headwinds, declining 2.7% over two years, while Florida saw values retreat 4.4% in the same period.

The price extremes tell their own story. Hawaii’s median single-family residence commands $959,688—nearly three times the national average reflected in many middle-market states. Meanwhile, West Virginia offers an alternative picture, with homes averaging $169,206.

The Southeast’s Mixed Signals: Tennessee in Context

The Southeast presents a study in contrast. Tennessee’s housing market, valued at an average of $327,566 per single-family home as of October 2025, demonstrates moderate resilience. The state posted a 2.4% gain over the two-year window, though the past year showed virtually flat movement at -0.2%—suggesting recent stabilization rather than growth.

Comparing Tennessee’s trajectory to neighboring markets reveals nuance. Kentucky ($226,256) has outpaced expectations with a 4.1% annual climb, while North Carolina ($332,359) and Georgia ($332,289) remain largely sideways, each posting minimal annual changes near -0.6% and -2.2% respectively.

Regional Performance Patterns

Midwest resilience continues to stand out. Indiana, Iowa, Kansas, and Ohio all logged strong two-year returns ranging from 7.4% to 9.4%, suggesting sustained buyer interest in affordable markets. Illinois’s recent acceleration ($285,028, +4.3% annually) points to renewed activity in the region.

The Mountain West shows division. While Wyoming ($357,954, +3.64% annually) and Montana ($459,396, +1.0% annually) remain positive, Arizona ($429,020) has slipped into negative territory with a -3.2% annual decline and -2.0% over two years. Colorado follows a similar pattern: $549,087 with a -2.2% recent pullback.

Northeast strength remains notable. New York ($483,605) surged 4.0% in the past year with an 11.6% two-year return. Connecticut ($453,495) echoed this pattern: +3.8% annually and +11.0% over two years. New Jersey’s $578,764 valuation and 2.9% annual gain underscores the region’s sustained appeal.

Critical Data Points for Prospective Buyers

High-value markets command attention. California ($784,364) has stabilized after recent turbulence, posting a -2.0% annual shift but a positive 1.8% two-year result. Washington ($605,992) remained steady with just -0.3% annual movement. Massachusetts ($667,117) continues its climb at +1.1% annually and +7.1% over 24 months.

Affordable starting points exist for budget-conscious buyers. Mississippi ($185,741), Louisiana ($208,936), and Arkansas ($216,142) remain among the nation’s most accessible markets. Arkansas has shown particular strength with a 4.1% two-year appreciation.

The data collection methodology relied on Zillow’s Single-Family Residence valuations tracked across multiple intervals: October 2023, October 2024, April 2025, and October 2025. This multi-point analysis captures both short-term volatility and longer-term trends, enabling year-over-year and semi-annual comparisons across all 50 states.

Looking Ahead

For 2026 homebuyers, the message is clear: do your homework by state. Markets that appeared overheated two years ago have cooled, while once-overlooked regions show surprising strength. Tennessee’s moderate performance—neither booming nor collapsing—positions it as a reasonable option for those seeking stability without expecting dramatic appreciation in the near term.