U.S. home prices decreased 0.1% in July compared with June but were up 1.7% compared with August 2024, signaling home price depreciation continued in most markets, according to the newly renamed S&P Cotality Case-Shiller Index.
The index’s 10-city and 20-city composites – measuring home price growth in the 20 largest U.S. cities – each posted drops of -0.1%.
Of the 20 major metros, 15 saw home prices fall in July compared with June, underscoring broad cooling even during peak buying season.
“July’s results reinforce that the housing market has downshifted to a much slower gear,” says Nicholas Godec, CFA, CAIA, CIPM, head of fixed income tradables and commodities at S&P Dow Jones Indices, in the report. “National home prices rose just 1.7 percent year-over-year, down from June’s 1.9 percent pace and a far cry from the double-digit gains of two years ago.”
“In fact, this is one of the weakest annual price increases in the past decade – and notably, it’s below the 2.7 percent rise in consumer prices over the same period,” Godec says. “In other words, U.S. home values have essentially stagnated after inflation, marking the third straight month of real housing wealth decline for homeowners. This reversal is striking: during the pandemic boom, home prices were climbing far faster than inflation, rapidly boosting homeowners’ real equity. Now, the situation has flipped – over the last year, owning a home yielded a modest nominal gain, but an inflation-adjusted loss.”
“Looking ahead, the housing market appears to be settling into a new, more measured equilibrium,” Godec adds. “The era of 15 percent to 20 percent annual home price jumps is behind us, and in its place we’re seeing growth rates closer to overall inflation – or even a bit below it. While that means homeowners aren’t gaining wealth at the breakneck pace of the recent past, it also signals a potentially healthier trajectory for housing in the long run. Prices that grow in line with incomes and consumer prices are more sustainable, and they reduce the risk of the kind of affordability crises and speculative bubbles we’ve seen before. The ongoing rotation in regional performance is another sign of normalization: markets with strong local economies and reasonable prices are doing better than those that overshot fundamentals. In short, the housing market’s post-boom era is one of stability over sizzle – a shift that may feel disappointing to sellers used to huge gains, but ultimately creates a more balanced and resilient foundation for the future.”
Photo: Breno Assis