National home price growth increased for the fifth consecutive month in July, according to the latest S&P Cotality Case-Shiller Indices published Tuesday.
Home prices grew 1.9 percent month over month, up from 1.6 percent in June. Chicago (+6.9 percent), New York (+5.8 percent) and Cleveland (+4.2 percent) led the way in price gains for the 20 largest metros, while Seattle (-1.6 percent), Las Vegas (-1.3 percent) and Denver (-1.1 percent) logged the largest declines.
However, 7 percent mortgage rates and stubborn inflation could end the price growth streak, putting it on the downturn alongside U.S. home values.
U.S. home values declined for the 14th consecutive month in July, with inflation (3.4 percent) outpacing home price gains (1.9 percent).
Anthony Smith
“Even with a modest pickup in July, home price growth is not keeping pace with inflation,” Realtor.com Senior Economist Anthony Smith said in an email to Inman. “If financing costs stay near 7 percent into the fall, the acceleration seen since spring may be difficult to sustain.”
The report said inflationary pressure in July was concentrated in energy, as the Iran War placed pressure on crude oil prices. The price per barrel in July was $80, pushing the average gasoline price up to $4.09 per gallon — a 95-cent increase from July 2025.
The situation has since worsened, with the price per barrel breaking $100 for the second time this year, pushing gasoline averages up to $4.45 per gallon in September.
Although price increases at the pump are worrisome, S&P Dow Jones Indices Associate Director of Commodities Rebecca Kaufman said core inflation, which excludes food and energy, has a bigger impact on housing affordability. Kaufman also noted that the indices’ non-seasonally adjusted measures posted smaller monthly gains than their seasonally adjusted counterparts, suggesting “seasonal factors” had a significant impact on July home prices.
“On a non-seasonally adjusted basis, the U.S. National and 10-City Composite Indices rose 0.12 percent and 0.03 percent month over month, respectively,” she said. “On a seasonally adjusted basis, they increased 0.3 percent and 0.4 percent, respectively. This suggests seasonal factors weighed heavily on home prices in July.”
Rebecca Kaufman
“Although inflation remained elevated at 3.4 percent, much of the increase was concentrated in energy…” she added. “By contrast, core inflation, which excludes food and energy, rose only 2.5 percent year over year. This distinction is important because persistent inflation in shelter and other core categories tends to have a more direct impact on housing affordability than energy-driven price fluctuations.”
Like the Case-Shiller Index, the U.S. Federal Housing Finance Agency’s (FHFA) July home price index showed growth, albeit at a slower rate.
The FHFA HPI showed home price growth inched up 0.3 percent month over month in July, with annual growth clocking in at 2.6 percent. For the nine census divisions, seasonally adjusted monthly home price changes ranged from -0.8 percent in the Mountain division to +1.5 percent in the Middle Atlantic division, the report said.
Smith said a “considerably more challenging” mortgage environment will affect upcoming housing reports, as 30-year fixed-rate averages stay above 7 percent. The federal funds rate and the 10-Year Treasury yield will drive what happens next. Right now, analysts project the Federal Reserve will continue to raise rates throughout 2026, with cuts coming back toward the end of 2027.
If that prediction comes true, mortgage rates could relax back into the mid-six percent range as early as 2027, according to a Yahoo! Finance analysis. As for when the market could move back to the five-percent range, the forecast shows that might not come until 2029.
