Home Value Growth Slows as Prices Drop in 9 Major Metros

                                       

By: Wiss Team

Wiss Team

National growth in home values continues to decelerate, with prices now falling in nine of the 20 major metropolitan areas tracked by the S&P CoreLogic Case-Shiller Index. Single-family home values rose 1.5% in August compared to the previous year, down from July’s 1.7% gain and marking the slowest annual growth pace since 2023, when home values briefly declined.

Southern and Western Markets See Price Declines

All nine metros experiencing annual price declines are located in the South and West regions: Tampa, Phoenix, Miami, San Francisco, Dallas, Denver, San Diego, Seattle, and Los Angeles. Seattle and Los Angeles newly appeared on the list of cities with falling home prices in August, while the other seven metros had previously registered annual declines in July.

New York reported the highest annual price gain among the 20 cities with a 6.1% increase in August, followed by Chicago at 5.9% and Cleveland at 4.7%.

Home Values Lose Ground to Inflation

August’s 1.5% annual home price gain falls well short of the 2.9% overall inflation rate during the same period, indicating home values are declining on an inflation-adjusted basis. For four consecutive months, home values have lost ground to inflation, resulting in declining real wealth for homeowners even as nominal prices increase modestly.

This development could provide relief to prospective buyers who have struggled with affordability in recent years, particularly when combined with falling mortgage rates. Average mortgage rates dropped to 6.19% last week, reaching their lowest level in more than a year as the Federal Reserve continues cutting its benchmark interest rate.

Regional Market Divergence Intensifies

The national trend masks significant regional variations, with Northeast and Midwest markets continuing to perform relatively better due to tighter resale supply and steadier demand. Sun Belt and Western metros show clearer signs of softening, with inventory recovering more rapidly, homes taking longer to sell, and more price cuts and delistings.

Tampa experienced the largest annual decline for the tenth consecutive month, with home values down 3.3% in August from the previous year. Cities like New York and Chicago, which stalled during the pandemic-era migration to the Sun Belt, now enjoy the strongest home price appreciation.

Monthly Data Suggests Broader Weakness

Housing market weakness may be spreading beyond the South and West, with home values falling on a monthly basis in 19 of the top 20 metros in August. Only Chicago saw monthly price growth, with a 0.26% gain from July. Portland and Los Angeles recorded the largest monthly declines, each falling more than 1%.

Market Reaches New Post-Pandemic Equilibrium

Markets that experienced the sharpest pandemic-era gains are now seeing the largest corrections, while more affordable metros with stable local economies are holding up better. The rapid appreciation of recent years has clearly ended, with price growth running at half the rate of inflation and several major markets in decline.

The Case-Shiller Index reports on a two-month delay and reflects a three-month moving average of home sales prices. The August data primarily reflects purchase decisions made in late spring or early summer, as homes typically go under contract one to two months before closing. The index is considered one of the most reliable measures of changing home values because it tracks repeat transactions on the same properties.

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