Home price growth continues to decelerate as some market stabilization occurs ahead of the spring buying season, according to the latest data.
The December S&P Cotality Case-Shiller Home Price Index saw home prices rise 1.3% year-over-year, slightly down from the 1.4% annual gain seen in November, which Nicholas Godec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, previously characterized as “among the weakest performances since mid-2023.”
As for the full year of 2025, prices saw a 1.3% growth, which Godec said was the “weakest full-year gain since 2011.”
Godec explained that the structural forces mortgage rates and inflation have largely reshaped the market over recent years, with home prices outpacing inflation in that time. However, he noted that this has seen a “notable reversal.”
“Over the prior decade, national home prices outpaced inflation by 3.7 percentage points annually, a dynamic that has quietly reversed, with real home price returns turning negative in June 2025,” Godec continued.
Realtor.com Senior Economist Anthony Smith noted that “broader economic conditions are beginning to tilt modestly in housing’s favor,” but added that “durability remains the key question.”
Smith said that softer inflation has helped to ease mortgage rates, and income growth has begun to ease some of the strained affordability seen of late. However, he added that “nearly five years of elevated home prices have partly offset those income gains and continue to weigh on consumer confidence.”
“A sustained stretch of lower inflation and a more certain labor market will be necessary to rebuild confidence and translate improved rate conditions into a durable housing rebound,” Smith continued.
In terms of the city composites, the 10-City Composite saw an annual increase of 1.9%, down from a 2% increase in November. The 20-City Composite posted a 1.4% year-over-year increase, the same as last month.
Chicago saw the largest gain among the 20 cities with a 5.3% increase in December, followed by New York, New York (+5.1%); Cleveland, Ohio (+4%) and Minneapolis, Minnesota (+2.7%). Losses were led by Tampa, Florida with a fall of 2.9%, followed by Denver, Colorado (-2.1%); Phoenix, Arizona (-1.5%); Dallas, Texas (-1.5%) and Miami, Florida (-1.5%).
“This geographic divergence reflects the broader reordering underway: Historically steady Midwest and Northeast markets continued to outperform as Sun Belt markets that surged during the pandemic cycle extended their correction,” Godec explained.
Month-over-month, home prices grew by 0.4% after a seasonal adjustment, and both the 10 and 20-City Composites saw month-over-month gains of 0.5%.
Overall, Smith said this and other housing market reports signal that “stabilization is occurring from a low base rather than signaling a broad rebound,” something economists have predicted previously.
Looking ahead, Smith said that “the path for home prices will depend heavily on spring supply dynamics,” something agreed upon in most major housing market reports as of late.
“A sustainable housing recovery requires both renewed buyer demand and a meaningful increase in fresh listings,” he continued. “Without a material easing of the lock-in effect, lower mortgage rates risk reigniting competition in already supply-constrained markets, potentially sustaining price growth. As a result, national home price appreciation is likely to persist, though at a tempered pace and increasingly shaped by local inventory conditions rather than broad macro momentum.”
