Midwest housing markets coming in hot for 2026

As the housing market moves into 2026, competition remains intense in many parts of the country — especially in smaller metros where inventory is critically low.

New findings from HW Data based on supply, pricing and buyer activity show that demand for single-family homes continues to far outpace available homes in several markets, even as price growth becomes uneven.

Across the hottest markets, a defining feature stands out — inventory well below one month at the current sales pace.

Bloomington-Normal, Illinois, stands out as HousingWire’s hottest market of 2026 and currently sits at 0.4 months of inventory. The median list price in the metro area is $355,000, up 16.4% from a year earlier.

Despite more than one-third of listings showing price cuts, demand remains strong enough to sustain rapid sales and upward pressure on prices.

“We need more houses in Bloomington,” Patty Hadley of RE/MAX Choice told HousingWire. “Our local government has started a few programs that are going to be helping with getting that accomplished, and we’re really excited about it.

“The houses keep moving pretty quickly. I had a house that was on the market for two months, which is unusual, but it was the time between Thanksgiving and Christmas, and that’s always a little bit slower. It’s a really exciting time here and in central Illinois, in general.”

Midwest and college towns dominant

The Midwest features prominently among the hottest markets — with Illinois and Ohio each claiming multiple spots.

Lawrence, Kansas; Sandusky, Ohio; Kankakee-Bradley, Illinois; Mansfield, Ohio; and Bay City, Michigan, all rank near the top due to tight supply and steady buyer interest.

College towns also appear to be playing an outsized role.

Bloomington-Normal; Lawrence; and Ithaca, New York, benefit from stable employment bases and consistent housing demand tied to universities, even as broader market conditions fluctuate.

“I sell everything from Peoria up to El Paso down to central Illinois as a whole, not just Bloomington,” Hadley added. “Normal is strong. Like I said, we don’t have enough houses in Bloomington, so we end up with a lot of people getting displaced in housing within 30 miles of the area.

“Bloomington also keeps a lot of people here because we have a lot of industry — there’s State Farm, we have Rivian, Carle Health, lots of things that keep people in our town. I can see that making our market stand out.”

Hot markets, cooling prices

Several markets illustrate that intense competition does not always translate into rising prices.

Great Falls, Montana, saw median list prices fall nearly 8% year over year, while Ithaca posted a 7.4% decline. Carson City, Nevada, and Lawrence also experienced modest price drops.

At the same time, price cuts are increasingly common.

In Sandusky, Carson City and Bay City, roughly half of all listings included a reduction. This suggests that sellers are testing the market — and adjusting quickly when buyers resist higher price points.

Larger metros still kicking

Among major markets with at least 1,000 homes for sale, competition is less extreme but still favors sellers.

Richmond, Virginia, and Spokane, Washington, stand out, with median list prices of $450,000 and $475,000, respectively.

In California, San Francisco-Oakland-Fremont remains competitive despite a median price approaching $1 million — reflecting a market that has stabilized but not softened dramatically.

Midwestern metros including Cincinnati, St. Louis, Columbus and Cleveland also rank among the hottest large markets, cementing the region’s relative affordability and growing appeal.

The early 2026 housing landscape is defined less by runaway price growth and more by a persistent shortage of homes.

Geographic diversity is striking — from small college towns to major coastal metros — but the common thread is limited supply.