Home Prices on the Rise, Yet Showing Signs of a Slowdown According to the Case-Shiller Index
U.S. Home Prices Continue to Climb, Albeit at a Slower Pace
In its latest report, the Case-Shiller U.S. National Home Price NSA Index showed a 3.4% increase in annual home-price growth in March. This figure represents a decrease from the 3.9% growth observed in February and a further decline from January's rate.
The index also reported annual home value increases by other measures, with the 10-city index climbing 4.8% and the 20-city index rising 4.1%. Despite these increases, all three indices saw a slight decrease after seasonal adjustment.
"Home price growth continues to decelerate on an annual basis in March, despite lingering demand," said Nicholas Godec of S&P Dow Jones Indices in a statement. "Limited supply and steady demand drove prices higher across most metropolitan areas, despite affordability challenges persisting."
Regional price trends remained varied, with cities like New York City, Chicago, Cleveland, Detroit, Boston, and Las Vegas demonstrating significant annual growth. Tampa was the sole major metro area to experience a decrease, marking a continued downward trend.
In contrast to current conditions, data from the past 20 years shows strong appreciation in places like Seattle, Dallas, and Charlotte. Nationally, appreciation was 102%, while cumulative inflation was 66% over the same period. The bottom five performers included Chicago, Las Vegas, and Minneapolis with relatively lower appreciation rates.
The Federal Reserve's interest rate moves—including its first cut in years and subsequent increases to combat inflation—have affected the housing market by influencing mortgage rates. The long-standing period of low mortgage rates following the Great Recession ended in 2022, with rates topping 6% for the first time since 2008. These higher rates have exacerbated the housing shortage and prevented many homeowners from selling.
As of May 2025, the average 30-year mortgage rate stands at 6.95%. This high rate, along with affordability concerns and waning consumer confidence, could present obstacles for potential homebuyers, particularly first-time buyers. However, those motivated to purchase a home may still face sticker shock due to increased financing costs.
In summary, U.S. home prices continue to rise, though growth is slowing. Affordability remains a concern, and prices may be reaching their peak. The increased inventory and reduced price growth have started to favor buyers, offering them more options and negotiating power. This transition in the housing market may gradually continue as conditions shift.
The increased mortgage rates, currently averaging 6.95%, could present challenges for potential homebuyers, especially first-timers, due to affordability concerns and waning consumer confidence. Meanwhile, the higher rates have also exacerbated the housing shortage, potentially preventing many homeowners from selling. For those still interested in investing in real-estate, the slower growth in the housing-market, coupled with the increasing inventory, might offer more opportunities for negotiation and a greater selection of properties.
