Home prices rose in 80% of U.S. metros in Q2

How to avoid surprises

I love surprises in movies and TV shows. In real estate, not so much. And your clients feel the same way. They want the buying or selling process to be as predictable and stress-free as possible.

That's why setting expectations from day one is so important. Explain what comes next, how you'll communicate, and what challenges could arise along the way. When clients know what to expect, they're less likely to feel anxious when something unexpected inevitably happens.

As you ramp up your business heading into the final months of the year, don't let communication slip. The busiest agents are often the ones juggling the most moving parts—but consistent communication is what builds trust, prevents misunderstandings, and turns satisfied clients into repeat clients and enthusiastic referrals.

- David

80% of U.S. markets saw home prices rise in Q2

Home prices rose in 80% of metro areas during the second quarter of 2026, up from 71% in the first quarter, and the median price for a home in the U.S. hit $434,900, up 1.5% from a year ago. That’s according to NAR’s latest quarterly update. 

Here’s what else it reports:

• Fewer markets are losing value. Only 20% of metros saw prices decline, down from 27% last quarter and 24% a year ago.

• Double-digit gains held steady. 5% of metros posted double-digit price increases, unchanged from Q1.

• The South is leading, the Northeast is lagging. Sales rose in three of four major regions — the South led on faster job growth, while the Northeast was the exception, held back by slower job growth and pricier homes.

• Regional medians: Northeast $547,200 (+3.8%), Midwest $340,800 (+3.6%), South $380,000 (+1.0%), West $637,900 (-0.8%).

• Inland and mid-size markets are driving the biggest gains. Beaumont-Port Arthur, TX topped the list at +11.0%, followed by Naples, FL (+10.5%) and Gulfport-Biloxi-Pascagoula, MS (+10.3%).

• Coastal California still holds the priciest markets — but even there, price growth is mixed: San Jose is down 4.2% year-over-year, while San Francisco is up 5.2%.

• Affordability is getting squeezed by rates, not prices. The typical mortgage payment hit $2,199/month (up $219 from Q1), with families now spending 23.8% of income on it — up from 21.8% last quarter.

• First-time buyers feel it more. They're spending 35.9% of income on a typical starter-home payment of $2,158/month, up from 32.9% in Q1.

My take

The 80%-of-metros headline sounds like a broad-based boom, but the details tell a more measured story: only 5% of markets saw double-digit gains, same as last quarter, so this is widespread but modest appreciation — not a hot market reigniting. And the double-digit gainers aren't the usual suspects. Syracuse and Lansing are outpacing LA and San Jose, not the other way around. That's a real shift, and it's useful ammunition for agents in secondary markets who've been fighting the perception that "real" appreciation only happens in glamour metros.

The income needed to buy the typical American home

Americans need to earn $109,796 to afford the typical home for sale in the U.S., down 0.5% from an all-time high of $110,382 a year ago, according to Redfin.

That means the typical household would need to spend 38% of its income on a median-priced home, and only 34% of U.S. listings are affordable to them. The income needed to buy a home is still roughly $22,000 above what the typical U.S. household earns — but that gap is narrowing. It was $26,000 a year ago and $29,000 two years ago.

Affordability is improving fastest on the West Coast, where falling prices in markets like Seattle and San Jose are bringing the income bar down — though homes there remain far out of reach for the average local earner.

Of the 46 most populous metros, here’s where buyers need the most and least income to afford a typical home:

My take

National affordability may be improving, but the gains remain modest and uneven. Buyers still need nearly $110,000 in annual income to afford the typical U.S. home, so this is hardly a return to a truly affordable market. What's more revealing is how differently local markets are evolving. In some metros, softer home prices are improving affordability. In others, strong demand continues to push prices—and the income needed to buy—even higher. Still, the combination of stronger wage growth, moderating home prices, and slightly lower mortgage rates is making homeownership attainable for more households than it was a year ago.

Top 10 states with the largest annual increases in REOs

One in every 632 homes, or 0.16%, had a foreclosure filing (default notices, scheduled auctions, or bank repossessions) in the first half of 2026. 

According to ATTOM, the worst foreclosure filing rates were in Florida (0.27%), South Carolina (0.26%), Indiana (0.25%), Delaware (0.25%), and Illinois (0.23%).

Overall, a total of 27,983 U.S. properties were repossessed by lenders (REO) in the first half of 2026, up 33% from the same period in 2025, but still 26% below the level recorded in the first half of 2020.

States with the highest raw REO counts were Texas (3,322), California (2,644), Florida (2,070), Pennsylvania (1,893), and Illinois (1,543).

Here are the top 10 states with the largest annual increases in REOs: 

1. Colorado: +176.7%

2. Florida: +83.8%

3. Minnesota: +83.1%

4. Alabama: +51.1%

5. Texas: +50.5%

6. California: +47.0%

7. Arizona: +46.4%

8. Virginia: +44.3%

9. North Carolina: +32.8%

10. Pennsylvania: +29.6%

My take

Percentage increases can be misleading when they start from a small base, so Colorado's 176.7% jump isn't necessarily the biggest story. Florida is the market that deserves the closest attention: it ranks among the nation's highest for foreclosure filing rates, REO volume, and year-over-year REO growth, suggesting homeowner distress is becoming more widespread there. Nationally, the 33% increase in lender repossessions may sound dramatic, but REO activity remains well below 2020 levels, pointing to a foreclosure market that is continuing to normalize rather than one entering a new housing crisis.

Schematics

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Foundation Plans

Advice from David to win the day

There is no “one way” to find new clients, but with the right strategies, I believe you can quickly learn how to generate real estate leads. Today, I’d like to offer you three tips:

Farm an area for potential sellers – It’s absolutely crucial to develop your book of business. My colleague Vinny Morales expertly did this through an ingenious yet simple email campaign that, with his partner Kris Everett, yielded more than $100 million in sales. I cannot encourage you enough to listen to my conversation with them. It’ll truly show you that anything is possible.

Volunteer your skills and time – As a real estate agent, networking is a great way to demonstrate your skills and knowledge to prospective clients. Organizing free-to-attend events like open houses or a Q&A session for first-time home buyers lets you meet potential clients face-to-face and win their business. You can develop an understanding of their wants and needs and show them how you can help them achieve their real estate goals. These events don’t always need to be held in person. You can field questions from buyers and sellers on a live stream or post a home walkthrough video on YouTube.

Create a referral network – In addition to joining a pre-existing agent referral network, create a referral network of your own by partnering with trusted local vendors in your area. For example, you might be able to form a partnership with various types of real estate professionals: appraisers, contractors, inspectors, mortgage brokers. Simply ask them if they’d be willing to recommend you to their clients for a fee. In turn, you can recommend them to your clients as they navigate the buying or selling process. It’s a win-win for both parties and another way of generating revenue.

For more tips on how to get real estate clients, read this.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“You’ve gotta keep control of your time, and you can’t unless you say no. You can’t let people set your agenda in life.” — Warren Buffett

Don’t let events or other people set your agenda. Stay ruthlessly focused on your goals — your time is limited, and you only get one life. Make the most of it. Have a wonderful week.

We’ll see you back here on Friday!

- David