Nationally, home prices are 55% higher than pre-pandemic levels, according to First American’s Data & Analytics Home Price Index (HPI), which tracks home price changes fewer than four weeks “behind real time.” The index segments home prices into start, mid, and luxury price tiers.
A December update to the index, released this week, indicates that Wyoming (+12.9%), Rhode Island (+10.9%), South Dakota (+10.6%), Vermont (+9.5%), and Connecticut (+8.5%) experienced the largest year-over-year home price gains in December among all U.S. states, with every state seeing annualized gains except Hawaii (-1.6%) and Florida (-1.3%), along with the District of Columbia (-1%).
On a monthly basis, national home prices remained mostly flat, rising only 0.1% from November to December, a trend that continued from the month before when prices rose only 0.03%. Recent data from Fannie Mae indicates that home prices jumped in the fourth quarter, though.
A highlight for the housing market heading into 2025 was steadily rising inventory in regional markets across the southeastern, south-central, and western U.S. Anticipated home price deceleration over the next two years ought to aid affordability, economists say, though that easing will not be evenly distributed. Northeastern markets have continued to see strong home price gains, indices show.
However, much of the anticipated easing has already begun in states like Florida and Texas. In simple terms, basic supply-and-demand dynamics are at play in markets where inventory has increased more rapidly since last summer, when home prices nationally began to move sideways in response to rising affordability concerns, said Mark Fleming, chief economist at First American.
“Higher mortgage rates in the latter half of the year, combined with higher inventory levels, triggered the cooling trend,” he explained. “If similar conditions persist through 2025, we should expect very moderate price appreciation.” The year didn’t begin with a cooling trend, however, with Fleming pointing out that home prices began 2024 at a 7% annualized pace of growth.
The likes of Fannie Mae and CoreLogic have also forecasted a sustained deceleration of home price growth over the next two years, with regions variations driven by inventory and affordability. In a January update to its December forecast, Fannie Mae lowered its origination and existing-home sales projections by 2.5% and 2.2%, respectively, on account of higher rates.
Meanwhile, the S&P CoreLogic Case-Shiller Home Price Index, which calculates indices using a three-month moving average and publishes with a two-month lag, showed national year-over-year growth from November 2023 to November 2024 of 3.8%, a 0.2% monthly rise.
“Unsurprisingly, the Northeast was the fastest growing region, averaging a 6.1% annual gain. However, markets out west and in once red-hot Florida are trending well below average growth. Tampa’s decline is the first annual drop for any market in over a year. Returns for the Tampa market and entire Southern region rank in the bottom quartile of historical annual gains,” said Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices.
The 10-City and 20-City Composites reported year-over-year increases of 4.9% and 4.3%, respectively. On a monthly basis (October to November) after seasonal adjustment, the national, 20-City, and 10-City Composite Indices all posted an increase of 0.4%.
“Home prices remained mostly unchanged starting in late summer through the end of 2024,” commented Selma Hepp, chief economist at CoreLogic, on today’s reading. “Thus, with most of the home appreciation happening earlier in the year, 2024 ended with about 3.3% overall appreciation, though there was notable variation across regions — Northeast led with over 7% total appreciation while the South lagged with an average of 2%.”
According to First American’s HPI, the core-based statistical areas (CBSAs) with the greatest increase in year-over-year price growth in December were Anaheim, Calif. (+6.1%); Cambridge, Mass. (+6%); Pittsburgh, Pa. (+5.8%); Las Vegas, Nev. (+4.4%); and, Warren, Mich. (+4.3%). The CBSAs with the greatest year-over-year declines were Tampa, Fla. (-4.6%); Oakland, Calif. (-0.8%); Austin, Texas (-0.2%); Los Angeles, Calif. (-0.1%); and, San Antonio, Texas (+0.5%).
Ultimately, the longer that homes sit unsold, the more inventory accrues, and the weaker sellers’ positions become in price negotiations. Yet, Fleming believes that the “structural housing shortage nationally” will “keep a floor” in places for home price declines, while a simultaneous higher-for-longer rate environment will control further home price moderation.
“As more homes become available, the power dynamics can shift in favor of buyers, putting downward pressure on prices,” he said. “All else equal, house price growth in markets with higher inventory of homes available for sale will weaken compared to those with low inventory relative to demand.”
Hepp echoed a similar outlook for the months ahead.
“Early housing market indicators suggest that [sic] 2025 spring home buying season may look very similar to 2024 — more inventory but also challenging affordability suggesting that home price appreciation will continue to slow, averaging about 2.4% for the year,” she said.
