Home sales prices continued to increase through the first month of the new year, with one major metro market in the Northeast boasting the biggest annual gain.
The latest S&P CoreLogic Case-Shiller Index data released Tuesday showed that the nationwide price went up 4.1% in January from a year ago, exceeding the 3.9% gain from December 2024.
Home prices in the 20 major U.S. metros tracked by the index were up 4.7% in the 12 months ending in January, up from a 4.5% increase in the previous month. The 10-city index also increased, going up 5.3%.
Taken together, all three Case-Shiller indices showed accelerating home price growth compared to the previous month.
New York City again reported the highest annual gain among the 20 cities with a 7.7% surge in January, followed by Chicago and Boston, with upswings of 7.5% and 6.6%, respectively.
Meanwhile, Tampa, FL, showed the lowest return, dipping 1.5%, making it the only market to post an annual decline.
“As the country as a whole faces tight inventory levels, regional variation in the housing market means that the impact varies geographically,” says Realtor.com® Senior Economic Research Analyst Hannah Jones. “Relatively 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.”
This month’s Case-Shiller release covers home sales that happened over November, December, and January—a period that saw growing inventory but also skyrocketing mortgage rates, which peaked at 7.04%, representing a nine-month high.
Rates for 30-year fixed loans have since leveled out in the 6.6% to 6.7% range, offering homebuyers a welcome reprieve just in time for the spring selling season.
California metro posts largest six-month decline
A zoomed-in look at home price trends during the second half of the year revealed that San Francisco recorded the largest six-month decline at 3.4%, followed by Tampa at 3.2%.
Only four of the 20 metros managed to eke out price gains during this stretch: New York, Chicago, Phoenix, and Boston, pointing to a widespread cooling of the market.
“Rising mortgage rates throughout the year elevated monthly payment burdens, which, combined with
already high home prices, pushed affordability to multi-decade lows in many regions,” says Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices.
Godec suggested that a dearth of affordable homes likely contributed to the market softening in the back half of the year, with both buyers and sellers staying on the sidelines.
How home prices are going to trend in coming months
The strength of New York City and Chicago’s real estate markets may reflect more normalized valuations, compared to other more volatile metros, according to Godec.
What’s more, markets in the Northeast and the Midwest are continuing to reap benefits from post-COVID-19 pandemic urban recovery.
In contrast, Sunbelt metros like Tampa and Phoenix that saw dramatic surges in home prices earlier in the cycle have since been on the receiving end of the sharpest downturns.
“Despite near-term softness, the S&P CoreLogic Case-Shiller Index remains historically elevated, and
long-term homeowners have continued to build equity,” Godec concludes. “The current cycle reinforces
the value of real estate as a long-duration asset, but also highlights how sensitive home prices are to
changes in financing conditions and buyer affordability.”
Based on typical seasonal trends, the Best Time to Sell a home is right around the corner, the week of April 13.
According to Jones, economic uncertainty could interfere with the spring market by making buyers and sellers more cautious.
“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,” says the analyst.