In Cape Coral, Florida, a three-bedroom house that sold for $410,000 in early 2023 might list for under $370,000 today. In Kansas City, Missouri, a comparable home that traded for $265,000 two years ago could fetch north of $285,000. Federal data released in early 2026 confirms what local agents in both metros have been seeing for months: these two mid-size cities now sit at opposite poles of the American housing market, and the gap between them is widening.
The numbers behind the split
The Federal Housing Finance Agency’s House Price Index for the fourth quarter of 2025 measured national home prices at 1.8 percent higher than a year earlier. The index uses a repeat-sales methodology, tracking the same properties over time through conforming-mortgage records from Fannie Mae and Freddie Mac, which filters out distortions caused by shifts in the mix of homes being sold.
Within the agency’s top 100 metro breakdown, Cape Coral-Fort Myers recorded a 9.1 percent annual decline in the Q4 snapshot, the steepest drop on the list. Broader index calculations that incorporate a slightly wider reporting window put the decline closer to 9.6 percent. Either way, the direction is unambiguous: Southwest Florida home values fell sharply. Kansas City topped the other end of the ranking at 8.6 percent annual growth. Most metros clustered far closer to the 1.8 percent national average, which makes these two outliers worth examining closely.
Why Cape Coral is falling
Cape Coral-Fort Myers was one of the pandemic era’s biggest winners. Remote workers flooded Southwest Florida between 2020 and 2022, pushing home prices up roughly 60 percent in barely two years. The correction now underway has several reinforcing drivers.
Property insurance is the most punishing. Florida’s homeowners insurance market has been in crisis for several years, with carriers leaving the state or imposing double-digit premium hikes. The Insurance Information Institute estimates that Florida’s average annual homeowners premium surpassed $6,000 by late 2025, roughly triple the national average. In Cape Coral, a canal-grid city with significant flood exposure, many owners also carry separate flood policies through the National Flood Insurance Program or private insurers, adding another layer of cost. Hurricane Ian, which devastated parts of Lee County in September 2022, accelerated carrier withdrawals and repriced risk across the region. For a prospective buyer, these carrying costs can add $500 or more per month on top of the mortgage, effectively shrinking the purchase price they can afford.
Supply has piled up at the same time. Active single-family listings in the Cape Coral-Fort Myers market ran roughly 40 to 50 percent above year-earlier levels through the second half of 2025, according to Southwest Florida MLS reporting tracked by local brokerages. New construction permits in Lee County remained elevated even as demand softened, feeding more inventory into a market that was already cooling.
A 9-plus percent decline after a 60 percent run-up still leaves many longtime owners with substantial equity. But for anyone who bought near the 2022 peak with a small down payment, the math has turned uncomfortable.
Why Kansas City keeps climbing
Kansas City’s 8.6 percent gain looks even more striking set against 1.8 percent national growth. The explanation starts with affordability.
The metro’s median existing-home sale price hovered in the low-to-mid $280,000 range through late 2025, according to Redfin market data. With 30-year fixed mortgage rates near 6.7 percent in early 2026, per Freddie Mac’s Primary Mortgage Market Survey, a median-income household in Kansas City can still qualify for a median-priced home. That is no longer true in Miami, Austin, or Phoenix, and the price gap is pulling demand inward from costlier markets.
Job growth has reinforced that pull. The Kansas City metro added positions in logistics, healthcare, and professional services through 2025, according to Bureau of Labor Statistics metro-area employment data. Oracle Health (formerly Cerner), several Amazon fulfillment operations, and a cluster of distribution-center operators have expanded footprints in the region, drawing workers who need places to live.
Inventory, meanwhile, has stayed tight. Unlike Cape Coral, Kansas City did not experience a construction boom proportional to its demand increase. That supply-demand mismatch has kept competition firm, particularly for move-in-ready homes near major employment corridors along the I-35 and I-70 corridors.
What the national average hides
A 1.8 percent national price gain sounds calm. But that average smooths over a distribution where some metros are declining by nearly double digits and others are appreciating at four to five times the national rate.
Cape Coral is not the only Sun Belt market under pressure. The FHFA data shows several Florida and Texas metros posting flat or negative returns, a pattern consistent with markets that overheated during the remote-work migration and are now giving back some of those gains. Rising insurance and property-tax burdens in both states have compounded the cooling.
Kansas City is not alone on the other side, either. Midwest and heartland metros like Indianapolis, Columbus, and Pittsburgh have also posted above-average appreciation, buoyed by relative affordability and steady, if unspectacular, economic fundamentals. The common thread: these markets never spiked as hard during the pandemic, so they had less air to let out.
For buyers and sellers, the practical takeaway is that national headlines about “the housing market” can be actively misleading. A seller in Cape Coral pricing a home based on early-2024 comparable sales risks sitting on the market for months. A buyer in Kansas City waiting for a meaningful dip may not get one while supply remains constrained and employers keep hiring.
How to read the data without overreading it
The FHFA index is one of the most methodologically rigorous housing measures available, but it has blind spots. It only covers conforming mortgages, so cash purchases, jumbo loans, and FHA- or VA-financed sales fall outside its scope. In a market like Cape Coral, where cash buyers from out of state have historically made up a large share of transactions, the index may understate the full extent of price movement.
Brokerage reports and listing-platform analyses fill some of those gaps with metrics the FHFA does not track: days on market, price reductions, and buyer competition ratios. Those sources are useful but come with smaller sample sizes and, in some cases, commercial incentives that can shade the narrative. Treat them as supporting evidence, not substitutes for repeat-sales data.
For a household planning to stay in a home for a decade, short-term swings matter less than long-term employment stability, insurance affordability, and local tax trajectories. For an investor on a two-year timeline, the spread between Cape Coral’s decline and Kansas City’s gain is the difference between a loss and a solid return. Knowing which type of decision you are making matters at least as much as knowing what the index says.
What comes next for both metros
Cape Coral’s path forward depends heavily on whether Florida’s insurance market stabilizes and whether builders pull back enough to let inventory drain. If premiums keep climbing and listings keep stacking up, further price erosion is plausible through the rest of 2026. A meaningful drop in mortgage rates could bring sidelined buyers back, but rates would likely need to fall well below 6 percent to offset the carrying-cost burden that now defines Southwest Florida homeownership.
Kansas City’s outlook hinges on whether job growth holds and whether builders can add supply without overshooting demand. The metro has historically avoided the boom-bust cycles that plague faster-growing Sun Belt cities, partly because its growth has been steadier and less driven by speculation. That pattern could hold, but an 8.6 percent annual gain is well above the metro’s long-run norm. Sustained appreciation at that pace would eventually test affordability even in a market where a starter home still costs under $250,000.
Between these two extremes, most American housing markets are doing something unremarkable: grinding slowly upward, roughly in line with inflation, in a high-rate environment that has frozen many would-be sellers in place. The real story is not the national number. It is the growing distance between the markets gaining ground and the ones losing it, and what that distance means for the families trying to make a home in each.
