In January 2025, home prices across the U.S. rose by 4.1% year-over-year, per the latest findings of the S&P Global and CoreLogic Case-Shiller Index, up very slightly from 4% the previous month.
The index, which runs on a two-month lag, had previously reported a 3.6% annual increase during October 2024, a 3.8% increase during November and a 3.9% increase during December. The index’s previous high was in August, when it came in at 4.2%.
Dr. Lisa Sturtevant, chief economist of Bright MLS, noted that the slow and slight increases in the index are just a small part of the market’s picture.
“Overall, the trend has been slower home price appreciation, with gains falling steadily from the most recent peak of 6.5% a year ago. Higher mortgage rates, along with high home prices, have exacerbated affordability challenges and led to slower home price appreciation,” said Sturtevant.
Hannah Jones, senior economic research analyst at Realtor.com®, noted in a release that the high mortgage rates (7% in January, the highest since May 2024) were a particular challenge for buyers in the surveyed period.
“Rates have since leveled out in the 6.6% to 6.7% range, offering buyers a small amount of relief as the spring home-buying season kicks off,” Jones added.
Nicholas Godec, head of fixed income tradables & commodities at S&P Dow Jones Indices, noted in a release that annual price appreciation largely happened in the first half of 2024. The second half of the year saw prices dragged down by the issues Sturtevant also cited, from mortgage rates to unaffordability.
Looking ahead, Sturtevant forecasts slower price growth during 2025: “Even as mortgage rates come down, it is likely that home prices will not grow as fast this year as they have over the past couple of years. More inventory has been coming onto the market, which gives buyers more leverage and room for negotiation. Our data shows that more sellers are dropping their asking prices to entice more buyer traffic.”
Jones also predicted that affordability improvements and overall economic uncertainty will be competing forces in shaping buyer behavior in 2025.
“Economic uncertainty could present a hurdle to this spring’s market as both sellers and buyers proceed with caution. Nevertheless, the recent downward mortgage rate trend and building inventory could present opportunities for buyers who have been waiting for their moment to take the leap,” said Jones.
Regional breakdown
The Case-Shiller Index found that in January, the highest price increases mostly occurred in the Northeast and Midwest, while the South and West saw the smallest increases.
“As the country as a whole faces tight inventory levels, regional variation in the housing market means that the impact varies geographically,” said Jones.
Of the 20 major U.S. metro areas surveyed in the index, only Tampa, Florida, saw an annual price decrease (1.51%) in January. The metro areas that saw the highest annual price increases were New York City, New York (7.75%); Chicago, Illinois (7.52%); Boston, Massachusetts (6.55%); Cleveland, Ohio (6.45%) and Detroit, Michigan (5.73%).
Detroit was recently singled out by a separate analysis for its unusually high price appreciation.
Conversely, the metro areas that saw the smallest price increases year-over-year were Dallas, Texas (1.34%); Denver, Colorado (1.87%); Atlanta, Georgia (2.4%); Phoenix, Arizona (2.74%) and Portland, Oregon (2.83%).
Monthly changes to prices saw a wider variance of increases and decreases. The largest increases in prices from December 2024 to January 2025 occurred in Los Angeles, California (0.51%); Chicago (0.47%) and Cleveland (0.24%). The greatest monthly decreases in prices were seen in Tampa (down 0.59%), Dallas (0.46%) and Portland (0.32%).
Analyzing these disparities, Jones said that “(r)elatively strong construction activity in the South and West have helped take some pressure off of home prices. However, the Northeast and Midwest continue to see demand significantly outstrip supply, which has led to more considerable price growth in the regions.”
“The strength in markets like New York and Chicago may reflect more normalized valuations relative to frontier regions, along with continued urban recovery trends post-pandemic. On the other hand, Sunbelt markets that experienced sharp run-ups earlier in the cycle—like Tampa and Phoenix—have seen the most pronounced slowdowns,” said Godec.
For the full Case-Shiller report, click here.
