The U.S. housing market is slowing under the combined weight of high mortgage rates and unaffordable prices.
In September, the S&P CoreLogic Case-Shiller 20-city index—which tracks residential real estate prices across 20 major metropolitan areas—rose only 0.2% from the previous month, barely keeping up with inflation.
In the year through September, home prices in the largest U.S. cities soared 4.6%, down from August’s 5.2% gain and below the 4.8% experts had expected. A broader measure, the national index, also showed slower growth: prices rose 0.3% for the month and 3.9% over the year, the weakest growth since the market’s pandemic-era boom started losing steam.
But despite the slowdown home prices hit record highs in September, a frustrating reality for buyers for whom owning a home feels further out of reach as the market remains stubbornly expensive.
Before seasonal adjustments, however, home prices in 20 major cities fell 0.3% in September, while the national index dipped 0.1%.
Meanwhile, the situation varies across cities. New York posted the biggest yearly price increase at 7.5%, and Denver barely grew at 0.2%. Some cities like Cleveland (+7.1%) and Chicago (+6.9%) outperformed, but others like Portland and Tampa recorded only 1% growth.
After months of soaring prices, the market is cooling as affordability hits historic lows. The median resale home cost $406,700 in September; new homes were even pricier at $426,300. With a limited housing supply and many homeowners unwilling to trade low-interest mortgages for higher rates, buyers are left with few options.
The Federal Housing Finance Agency also reported a 0.7% monthly rise and a 4.4% annual hike in September home prices. However, as the agency’s Anju Vajja noted, surging prices and expensive mortgage rates are starting to throttle demand.
The future looks uncertain. Mortgage rates stayed below 7% in the third quarter, but they have jumped sharply since November’s election. That could lead to even slower price growth—or even outright declines—in the coming months as the market faces new pressures.
