U.S. single-family home prices rose 1.7% year over year in Q1 2026, with a 0.5% quarterly gain. However, inflation outpaced home price growth, causing real values to decline. Price increases varied by state, with Illinois up 7.3% and Colorado down 2.4%. Higher mortgage rates near 6.65% are squeezing affordability, reducing demand and bidding wars, while some markets stabilize with eased sale cancellations.