New data on the U.S. housing market shows that prices barely ticked up in September, and that the gains did not keep up with inflation.
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The new data comes from the S&P Cotality Case-Shiller U.S. National Home Price NSA Index. It reveals that in September, home prices rose 1.3 percent year over year.
- That’s less than the uptick in August, when prices rose 1.4 percent annually.
- September’s Consumer Price Index, a measure of inflation, was 1.7 percent higher than home price appreciation.
- “For context, this represents the weakest annual price growth since early 2023, when the market was absorbing the initial shock of the Federal Reserve’s aggressive rate-hiking cycle,” Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, said in a report on the data.
Nicolas Godec | Credit: S&P Global
Godec also said in the report that “the housing market’s deceleration accelerated in September,” adding that the month’s numbers represent “a stark contrast to the double-digit gains that characterized the early post-pandemic era.”
Home price sluggishness will likely not come as a surprise to real estate professionals, but the report also characterizes the situation as a “tale of two markets.” Markets leading the country tended to be big, eastern cities.
- Chicago led the country, with prices rising 5.5 percent year over year in September.
- New York and Boston came in at second and third, with gains of 5.2 percent and 4.1 percent, respectively.
- Alternatively, prices in Tampa dipped annually in September by 4.1 percent — “the sharpest drop among tracked metros and its 11th consecutive month of negative annual returns,” the report states.
“The geographic rotation is striking,” Godec said of the numbers. “Markets that were pandemic darlings — particularly in Florida, Arizona and Texas — are now experiencing outright price declines. Meanwhile, traditionally stable metros in the Northeast and Midwest continue to post solid gains, suggesting a reversion to pre-pandemic patterns where job markets and urban fundamentals drive appreciation rather than migration trends and remote-work dynamics.”
Dr. Lisa Sturtevant | Bright MLS
Bright MLS Chief Economist Lisa Sturtevant said in a statement that the latest numbers mirror the “K-shaped” economy and suggest there is also a “K-shaped housing market.” Additional commentary from Sturtevant:
- “Higher-cost markets, with higher-income buyers, are seeing faster price growth.”
- “Affordability is the biggest constraint in the market right now.”
- “The growing divide in the housing market is troubling because it is leading to a wider wealth gap.”
Godec ultimately concluded in the report that “September’s monthly performance was uniformly weak” and that “a deeper look at momentum shows clear weakening.”
“For context, this represents the weakest annual price growth since early 2023, when the market was absorbing the initial shock of the Federal Reserve’s aggressive rate-hiking cycle,” Godec continued. “Yet unlike that period, which saw a quick rebound, current conditions suggest more persistent headwinds. With mortgage rates stubbornly elevated and affordability at multi-decade lows, the market appears to be settling into a new equilibrium of minimal price growth — or, in some regions, outright decline.”
