Supply gaps show where LOs should focus: Chicago, Pittsburgh lead

Mortgage professionals hunting for growth markets should look where inventory hasn't recovered: Chicago and Pittsburgh are posting the strongest mid-tier home price appreciation in the country, at 4.2% year-over-year, as housing supply in both metros remains well below pre-pandemic levels.

That's the signal from First American Data & Analytics' Home Price Index Report for June 2026, which shows U.S. annual home price appreciation accelerating for a second straight month, its fastest pace since last August, as inventory gains that had kept prices in check all year begin to level off.

"The key reason is that inventory growth has slowed, after a year of rising supply helped keep price appreciation in check," said Mark Fleming, chief economist at First American. "In the second half of the year, if supply stops improving while demand remains steady, home price appreciation is likely to continue gaining momentum."

The flip side matters just as much for prospecting: markets flooded with new supply, like Denver, Tampa, and Las Vegas, are seeing prices correct as buyers gain leverage. For loan officers and brokers building pipeline, the local supply picture is now the clearest predictor of where price momentum, and refinance or purchase opportunity, is headed next.

When broken down into three market tiers, the data shows St. Louis leading starter homes with a 12.4% year-over-year appreciation. The Chicago-Naperville-Schaumburg and Pittsburgh areas saw the highest mid-tier growth at 4.2%, while Fort Worth-Arlington-Grapevine topped the luxury tier with a 14.5% increase. 

The largest price drops hit starter homes in Dallas-Plano-Irving at 13.8%, mid-tier homes in Oakland-Fremont-Berkeley at 4.4%, and luxury homes in Las Vegas-Henderson-North Las Vegas at 1.6%. 

Statewide, prices increased the most in Maine at 8.7% and decreased the most in New York at 6.0%. 

This comes as a typical starter home costs at least $1 million in 242 cities, with the number of markets more than tripling from 80 in pre-pandemic 2020. While homes have appreciated, the consequence of those rising prices is a drop in sales volume and buyers struggle with affordability. 

Forecasters like Realtor.com also are trimming their annual growth predictions in 2026 to around 1.2%, noting that high prices and inflation continue to squeeze the market.