After more than half a decade of soaring real estate prices, the pendulum is swinging back in favor of U.S. home buyers, new data shows.
According to (1)Realtor.com (1), American home prices are posting their sharpest annual decline since 2017 — the eighth consecutive price decline. Overall, home prices have slid 2.5% from June 2025 to June 2026, landing at $430,000. At an average mortgage rate of 6.49%, a new homeowner in a $430,000 property with a 20% down payment can expect to save about $132 per month compared to a year ago.
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“Sellers are reading market conditions and are pricing accordingly from the start rather than listing high and cutting later, and buyers are taking note and making bids,” Danielle Hale, Realtor.com’s chief economist, (1)said in a statement (1). “This is a welcome sign that we are in a functioning market.”
Yet homebuyers aren’t out of the woods yet.
One big caveat is that mortgage rates and property taxes remain elevated, which could give buyers some pause, even if U.S. home prices reverse in mid-2026.
“Headlines about falling home prices are only telling part of the story,” David Temko, president of C2 Financial Corporation, told Moneywise. “Buyers make a purchase based on the mortgage, property taxes, insurance, and every other cost that comes with owning a home, which are all skewing higher in 2026.”
If you’re on the hunt for a new home, the Realtor.com figures are encouraging, but they’re not the entire story. Potential buyers need to account for some other key “buy” factors before signing on the dotted line in 2026. Experts say that, in particular, these issues should be prioritized on any new home journey right now.
Read More: 7 essential money moves to make once you’ve saved $10,000
Buyers shouldn’t get too excited yet
Real estate professionals say the U.S. housing markets need a much sharper decline than what we’re seeing to actually call anything an affordability fix.
Exhibit A is Realtor.com’s June data, which showed the national median listing price fell 2.5% year over year. Yet when you actually run the numbers, a buyer purchasing that home in June 2026 paid only about $132 less per month than someone buying a comparable home a year earlier, and most of that came from rates easing, not the price drop itself.
“The headline sounds significant, but the real relief buyers are feeling is small, and it’s being offset in a lot of markets by property taxes and insurance premiums that keep climbing,” Ashley Harris, director of homebuyer education at Neighbors Bank, told Moneywise. “Both things are true at once.”
Harris said buyers have a little more room than they did a year ago, but it’s nowhere near enough. “What actually moves the needle is a much bigger price correction combined with more truly affordable starter home inventory, not a percentage point here or there,” she said.
Watch the mortgage rate
Other market analysts say that, over a full ownership horizon, the mortgage rate usually carries the most weight when buying a home, followed closely by ongoing ownership costs, with purchase price often the least important of the three.
“Here’s the logic I give clients,” Adriana Montes, founder and CEO of Florida Dreams Realty Group, told Moneywise. “You can refinance a rate, but you cannot refinance your purchase price, and you can never refinance your property taxes or insurance. Those ongoing costs are permanent, they compound every single year, and they tend to rise.”
Yet buyers should also understand that a lower purchase price is a one-time win. “But a lower rate saves you every month for as long as you hold the loan,” Montes said.
Additionally, ongoing costs, taxes, insurance, HOA dues, and maintenance are silent budget killers because they never go away and rarely go down. Montes’ rule of thumb is to negotiate hard on price, as it’s the lever you control today, but underwrite the deal based on ownership costs, as that’s what determines whether you can still afford the home in year five. “A cheap house with a punishing insurance premium is not a bargain,” she added.
Add maintenance costs to any housing budget
Homebuyers, especially first-time bidders, typically focus on the property price and the mortgage rate, and maybe property taxes and insurance. That outlook is missing a key housing cost metric.
Another huge price factor is maintenance, especially in older homes.
“Buyers will understandably spend a lot of time thinking about the fun stuff,” Anj Catalano, a realtor at the Agency in Los Angeles, Cal., told Moneywise. “They’ve probably moved from a condo, they’ve finally got outside space, and they’re excited about buying furniture.”
While it’s a buyer buzzkill to do so, Catalano recommends building more expensive issues into the new household budget. “These are the unsexy issues, like sewer lines, roofs, HVAC systems, drainage, electrical, and obviously, if you live in a hillside area, brush clearance, along with deferred maintenance that might not be obvious during a quick showing,” she said. “A house can present beautifully but still have major system upgrades that need doing, or things that are near the end of their useful life.”
Catalano also believes first-time buyers underestimate how expensive things can be, and how much those costs vary by property type and neighborhood.
“In LA, for example, insurance is really a variable thing depending on your location, fire exposure, and how old your house is,” she said.
Consequently, a buyer looking at a condo or townhouse might focus on the monthly payment without really considering other key expenses. “That includes HOA dues, whether there’s going to be a special assessment, how much money the HOA has in reserves, and the possibility of needing a buffer for those wider repair costs,” she added.
Take a holistic approach to a new home budget before buying
New homebuyers should start with the full number, not just the price, when building a budget.
“Take your purchase price, expected down payment, and rate, then add property taxes, homeowners’ insurance, HOA dues, and a realistic maintenance estimate, generally 1 to 2% of the home’s value per year,” Harris advised. “That total is what actually determines whether a home fits your budget, not the number on the listing.”
That’s particularly critical before opting for a lower asking price, which makes a home more affordable. “In that scenario, calculate the complete PITIA number: principal, interest, taxes, insurance, and association dues, then add a realistic maintenance reserve of roughly 1% to 2% of the home value per year,” Montes said.
Make sure to get an actual insurance quote and a forward-looking tax estimate for that specific property before you fall in love with it, not after you are under contract. “That’s important,” Montes added. “In Florida, for example, taxes and insurance alone can add more than $1,000 a month, sometimes rivaling principal and interest combined.”
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Realtor.com (1)
This article originally appeared on Moneywise.com under the title: US home prices just fell to $430,000 — but the $132/month savings is vanishing into taxes and insurance
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