Key Highlights
- National home prices up just 1.5% annually, weakest gain in over two years
- Real housing wealth declines for fourth consecutive month as gains trail 3% inflation
- 19 of 20 major metros see month-over-month price drops in August
- Mortgage rates above 6.5% continue to suppress buyer demand
The U.S. housing market showed continued signs of cooling in August, with home prices growing at their slowest annual pace in more than two years while falling further behind inflation, according to the latest S&P CoreLogic Case-Shiller Index released Tuesday.
The National Home Price Index rose just 1.5% year-over-year in August, down from 1.6% in July and marking the fourth consecutive month that price gains have lagged the 3% inflation rate. The trend signals an erosion of real housing wealth for homeowners across the country.
“For the fourth straight month, home values have lost ground to inflation, meaning homeowners are seeing their real wealth decline even as nominal prices inch higher,” said Nicholas Godec, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices.
The weakness was broad-based, with 19 of 20 major metropolitan areas posting month-over-month declines before seasonal adjustment. Only Chicago recorded a gain. The National Index fell 0.3% in August, while both the 10-City and 20-City Composite indices dropped 0.6%.
Regional disparities remained stark. New York led all metros with a 6.1% annual gain, followed by Chicago at 5.9% and Cleveland at 4.7%. These Midwest and Northeast markets, which saw modest appreciation during the pandemic, continue to outperform.
Meanwhile, markets that experienced the sharpest pandemic-era gains are now facing the steepest corrections. Tampa led declines with a 3.3% year-over-year drop, while Phoenix and Miami each fell 1.7%. Several Western markets also posted losses, including San Francisco (-1.5%), Denver (-0.7%), and San Diego (-0.7%).
On a monthly basis, Phoenix saw the largest decline at 0.9%, while Los Angeles, Portland, and Denver each dropped between 0.7% and 1.0%.
Looking ahead, Godec noted that while this adjustment may ultimately lead to a more sustainable market, the current environment presents challenges for both buyers and sellers. “Homeowners are watching their real equity erode while buyers face the dual challenge of elevated prices and high borrowing costs,” he said.
