Illinois and New York Led Nation with 6.9% and 6.8% Price Gains
Min 1: Middle Atlantic Division Posted 5.7% Appreciation
All census divisions except Pacific division had positive house price changes year-over-year according to FHFA data. Middle Atlantic division recorded strongest appreciation posting 5.7% increase from third quarter 2024 to third quarter 2025. Pacific division recorded 0.1% decline. For nine census divisions, seasonally adjusted monthly home price changes ranged from -0.4% in East South Central division to +1.0% in West South Central division. Twelve-month changes ranged from -0.7% in West South Central division to +5.3% in Middle Atlantic division per December monthly update. October data showed house prices rose 0.4% with 1.7% year-over-year gain while previously reported 0% price change in September revised downward to 0.1% decline. Geographic divergence creating clear winners and losers as Northeast and Midwest markets appreciate while Sun Belt corrects from pandemic-era overheating.
Min 2: 76 of Top 100 Metros Saw Price Increases
House prices rose in 76 of 100 largest metropolitan areas over previous four quarters according to FHFA tracking. Annual price increase greatest in Allentown-Bethlehem-Easton, Pennsylvania-New Jersey at 9.7%. Metropolitan area that experienced most significant price decline was Cape Coral-Fort Myers, Florida at -10.8%. Trends in Top 100 Metropolitan Statistical Areas available in interactive dashboard at FHFA website with first tab displaying rankings and second tab offering charts. FHFA HPI comprehensive collection of publicly available house price indexes measuring changes in single-family home values based on data extending back to mid-1970s from all 50 states and over 400 American cities. Index incorporates tens of millions of home sales offering insights about house price changes at national, census division, state, metro area, county, ZIP code, and census tract levels. Methodology based upon weighted repeat-sales statistical technique analyzing house price transaction data.
Min 3: Florida Markets Led National Declines
Six states posted year-over-year price declines in third quarter with Florida leading at -2.3%. Cape Coral-Fort Myers posting steepest metropolitan decline at -10.8% reflects overbuilding during pandemic combined with insurance crisis and property tax pressures. North Port-Sarasota-Bradenton recorded second-quarter decline at -11.2% showing widespread weakness across Florida Gulf Coast markets. One-third of largest 100 metros experienced year-over-year price declines by October spreading beyond Florida into Texas, California, and Mountain West. Share of metros posting drops surged from just six at start of year to 32 by October according to Cotality December report. Home price growth slowed from 3.4% annual increase in January to just 1.1% by October—lowest since 2012—marking significant deceleration over course of 2025. Within three years, housing market changed markedly compared with robust gains of 2022 when some metros saw over 30% appreciation.
Min 4: Midwest Homeownership Rate Highest at 68.9%
Younger buyers making progress with homeownership among those under 35 rising to 37.5% in third quarter 2025 according to Census Housing Vacancy Survey released December 11. Midwest continues leading country with highest overall homeownership rate at 68.9%. Only region to increase homeownership rate from 2023 to 2024 as affordability advantages attract migration from expensive coastal markets. Third quarter homeownership rate highest for householders aged 65 years and over at 77.9% and lowest for those under 35 at 37.5%. Compared to previous year, homeownership rates increased in three age groups with under-35 gaining 0.5% points while 45-54 age group experienced 0.3% point increase. National homeownership rate of 65.3% not statistically different from 65.6% third quarter 2024 nor 65.0% second quarter 2025. For homeownership by race, non-Hispanic White Alone householders reporting single race highest at 74.0% while Black Alone householders lowest at 45.7%.
Min 5: Target Illinois and New York for Appreciation Capture
The FHFA data identifying Illinois and New York as appreciation leaders creates tactical opportunity for investors seeking Midwest and Northeast exposure. An investor who deploys $1.5 million into 10 single-family rentals across Chicago suburbs and Upstate New York markets at $150,000 average basis captures 6.9% and 6.8% annual appreciation respectively. Ten properties purchased January 2025 at $1.5 million basis appreciate to $1.605 million by December capturing $105,000 value increase. Properties also generate cash flow as Chicago suburbs rent $1,500 monthly on $150,000 basis delivering $18,000 annual rent per property or $180,000 total. Debt service on $1.125 million financed at 7% (75% LTV) runs $7,490 monthly or $89,880 annually while operating costs estimated $45,000 leaves $45,120 net cash flow. Combined appreciation of $105,000 plus cash flow of $45,120 totals $150,120 annual returns on $375,000 equity deployed representing 40% levered returns. Middle Atlantic division's 5.7% appreciation provides confidence trend sustainable through 2026 as Cotality forecasts continued strength in northeastern markets.
The Takeaway
Illinois and New York led nation with 6.9% and 6.8% price gains in third quarter 2025 per FHFA data as Middle Atlantic division posted strongest 5.7% appreciation while Pacific division declined 0.1%, with house prices rising in 44 states and DC but down in six states led by Florida's -2.3%. 76 of top 100 metros saw price increases with Allentown-Bethlehem-Easton leading at 9.7% while Cape Coral-Fort Myers posted steepest decline at -10.8% as share of metros with year-over-year drops surged from 6 to 32 by October with home price growth slowing from 3.4% January to 1.1% October—lowest since 2012. Florida markets led national declines with Cape Coral at -10.8% and North Port-Sarasota-Bradenton at -11.2% reflecting overbuilding and insurance crisis, while one-third of largest 100 metros posted drops spreading into Texas, California, and Mountain West. Younger buyers making progress with homeownership under 35 rising to 37.5% in Q3 2025 while Midwest leads country at 68.9% as only region increasing homeownership 2023-2024 with national rate at 65.3% unchanged from prior year. Investors deploying $1.5 million into 10 Chicago suburbs and Upstate New York rentals at $150,000 basis capture 6.9% to 6.8% appreciation generating $105,000 value increase plus $45,120 cash flow after debt service and operating costs—total $150,120 annual returns on $375,000 equity representing 40% levered returns as Middle Atlantic's 5.7% appreciation provides confidence trend sustainable.
