Key Takeaways
- A nationwide index of housing prices showed that home values grew at a rate slower than inflation in June, which might indicate a cooling market.
- Housing prices are diverging by location, with prices in the Northeast and Midwest climbing, while prices in the South and West fell.
- Housing inventory levels are up, which is keeping prices down in some locations.
Fresh data about U.S. home values is the latest sign that the market is dimming for sellers.
The problem: The growth rate of home prices isn’t keeping up with inflation, which might indicate a cooling market. In some areas prices are actually falling. At the same time, housing inventory is climbing, giving buyers more options to choose from than they’ve had in a while.
Nationwide home prices in June were up 1.9% year over year, according to the most recent S&P Cotality Case-Shiller home price index. Thats the slowest growth rate since the summer of 2023. Prices grew much more slowly than the 2.7% rate of inflation recorded in that same period, effectively putting the brakes on the pandemic-era housing boom.
“For the first time in years, home prices are failing to keep pace with broader inflation,” said Nicholas Godec, head of fixed-income tradables and commodities at S&P Dow Jones Indices. “American housing wealth has actually declined in inflation-adjusted terms over the past year—a notable erosion that reflects the market’s new equilibrium.”
Reversing Pandemic-Era Trends
This shift comes after a yearslong runup in home values. The growth rate for home prices hit its peak of 20.7%. year-over-year, in March 2020.
“The market’s health is supported by a cumulative 49% home price appreciation for a typical American homeowner from pre-COVID July 2019 to July this year,” said National Association of Realtors chief economist Lawrence Yun. “Overall, homeowners are doing well financially.”
Still, data from July also indicates the market is softening. In July, existing home sales prices grew by a meager 0.2% year-over-year—far less than the inflation rate. The average price of a new home in July fell by 5.9%.
Meanwhile, mortgage rates remain elevated at 6.7%, posing another challenge for buyers and sellers alike.
Shifts In Supply And Demand
Housing markets are local, so home values and sales trends depend on where you live. During the pandemic, homebuilding boomed in regions like the South and West, but now a oversupply in those areas is driving price drops. Tampa home values fell by 2.4% and San Francisco prices were down 2% year-over-year, the index showed.
At the same time, price appreciation in Northeast and Midwest locations are well over inflation rates. Prices in New York City were higher by 7% in July, and up 6% in Chicago, according to Case-Shiller.
Heres where home prices rose and fell the most in June 2025.
And yet, even as average U.S. prices are flat or down, the inventory of homes for sale continued to grow.
Indeed, supply is the force that’s driving the split between geographical areas in the U.S., said Heather Long, chief economist at Navy Federal Credit Union.
The U.S. had a 9.2 month supply of new homes in July, near an all-time high and well over year-ago levels. Existing home inventory in July also climbed to a 4.6 month supply, up from 4 months in July 2024.
“There’s a glut of homes for sale—both new homes and existing homes,” Long said. “And buyers aren’t interested at these prices and mortgage rates.”
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