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U.S. home prices inched up slowly in January, according to data released Tuesday by S&P Dow Jones Indices (S&P DJI) and the Federal Housing Finance Agency (FHFA). While prices grew overall, the pace was uneven throughout the year.
The FHFA Housing Price Index reported a 4.8 percent annual growth rate, while the S&P CoreLogic Case-Shiller Indices showed a slightly lower increase of 4.1 percent.
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However, on a month-to-month basis, growth was much more modest. In January, the FHFA HPI recorded just a 0.2 percent uptick, following a revised 0.5 percent gain in December.
Regionally, the West North Central division led the way in month-over-month gains, while the Middle Atlantic division saw the highest annual jump at 8.2 percent.
Looking at the metro areas, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index showed a 0.6 percent increase after month-over-month seasonal adjustments. The 20-City and 10-City Composites also saw modest gains of 0.5 percent. Among individual cities, New York City led the way with a 7.7 percent annual price increase, followed by Chicago (7.5 percent) and Boston (6.6 percent). Meanwhile, Tampa was the only city to see a decline, with prices dipping 1.5 percent.
Nicholas Godec | Head of Fixed Income Tradables & Commodities at
S&P Dow Jones Indices
Nicholas Godec, head of fixed income tradables & commodities at S&P Dow Jones Indices, reflected on the two-part trend over the past year.
“The National Composite Index posted a 4.1 percent annual gain, with the bulk of appreciation–4.8 percent–occurring in the first half of the year,” Godec said. “Prices declined 0.7 percent in the second half, as high mortgage rate and affordability constraints weighed on buyer demand and market activity.”
Indeed, rising mortgage rates throughout the year made homeownership more expensive, pushing affordability to historic lows in many areas. According to Godec, this likely contributed to the slowdown in market activity, as both buyers and sellers became more cautious. Limited inventory also remained a challenge.
Some cities felt the impact of this shift more than others.
San Francisco recorded the largest six-month price decline at 3.4 percent, followed closely by Tampa, Florida at 3.2 percent. Out of the 20 cities tracked by the index, only New York, Chicago, Phoenix and Boston — saw price increases in the second half of the year.
Godec suggested that these gains may be linked to relative affordability compared to more expensive markets, as well as post-pandemic urban recovery trends. However, he also noted that despite recent price fluctuations, home values remain historically high.
“The S&P CoreLogic Case-Shiller Index remains historically elevated, and long-term homeowners have continued to build equity,” he said. “The current cycle reinforces the value of real estate as a long-duration asset, but also highlights how sensitive home prices are to changes in financing conditions and buyer affordability.”
