National home price growth has decelerated to its slowest rate since March 2012, according to the February 2025 Home Price Index (HPI) report by First American Data & Analytics. The report indicates that, while house prices have risen 54.8% compared to pre-pandemic levels in February 2020, the annual growth rate from February 2024 to February 2025 was 2.0%.
Chief Economist Mark Fleming attributes this slowdown to ongoing affordability constraints and rising inventory levels. Despite a slight retreat in mortgage rates during February, the softened home price growth reflects earlier periods when demand decreased as mortgage rates exceeded 7%. Fleming suggests that this trend could benefit buyers, offering more opportunities as the spring home-buying season approaches. However, he cautions that recent rate declines and seasonal demand might lead to renewed price growth in markets where demand surpasses supply.
The report also highlights regional variations in price growth. Sunbelt markets, such as Tampa, Florida, and Phoenix, have experienced slower home price growth, attributed to significant home building that has increased inventory and eased price pressures. Conversely, the Northeast, with less new construction and tighter inventories, continues to see stronger price growth.
“Sunbelt markets lead the nation in the slowest home price growth among the markets we track,” added Fleming. “Significant home building in many of those markets has increased inventory, easing price pressure. Markets where home prices are slowing, making for a more buyer-friendly conditions include Tampa, Fla. and Phoenix. In contrast, the Northeast has seen far less new construction, and where inventories remain tight, price growth follows.”
In the starter home segment, Pittsburgh leads with an 11.4% year-over-year increase, followed by Baltimore at 7.8%, St. Louis at 5.8%, New York at 5.5%, and Charlotte, North Carolina, at 4.2%. These figures underscore the varying dynamics across different metropolitan areas and housing market segments.
Overall, the national housing market is exhibiting signs of cooling, with slower price growth potentially signaling a shift toward more buyer-friendly conditions in certain regions.
