Home prices fell in nine out of 20 of the biggest U.S. metropolitan areas in August, according to the latest S&P Cotality Case-Shiller Index, as the U.S. housing market faced a slump due to ongoing affordability issues.
Why It Matters
Between 2020 and 2022, the years of the pandemic, home values appreciated all across the country as a result of a surge in demand triggered by historically low borrowing costs. At the time, the country was facing a shortage of homes which caused homebuyers to engage in bidding wars and bring property prices up.
While parts of the country have experienced a construction boom since then—especially Florida and Texas—regions like the Northeast are still facing a severe shortage of homes that is keeping prices high.
But since the beginning of the year, inventory has grown nationwide as a result of more sellers coming into the market and buyers withdrawing from it due to rising housing costs, including stubbornly high mortgage rates, which have lingered between 6 percent and 7 percent for the past three years.
These trends have forced the U.S. housing market to slow to a crawl this summer, putting pressure on home prices to come down—or at least decelerate their once-vertiginous growth.
What To Know
The value of single-family homes in the U.S. rose 1.5 percent in August compared to a year earlier, according to the latest S&P Cotality Case-Shiller Index, which was released on Tuesday.
That was down from the 1.7 percent increase reported in July and the slowest growth pace since 2023.
Among the 20 major U.S. metros analyzed in the report, home values fell in nine metros all located in the South and the West, including Tampa, Phoenix, Miami, San Francisco, Dallas, Denver, San Diego, Seattle, and Los Angeles.
All metros—with the exception of Seattle and Los Angeles—had experienced annual declines in July as well.
Tampa saw the biggest decline in home values of all metros, at -3.31 percent, followed by Phoenix (-1.68 percent), Miami (-1.66 percent), San Francisco (-1.54 percent), Dallas (-0.72 percent), Denver (-0.72 percent), San Diego (-0.66 percent), Seattle (-0.09 percent) and Los Angeles (-0.01 percent).
On the opposite end of the spectrum is New York City, which saw the biggest annual home value increase of the metros analyzed, at 6.1 percent. Chicago was a close second, with a year-over-year increase of 5.9 percent, followed by Cleveland (+4.65 percent), Boston (+4.08 percent), Detroit (+3.53 percent), Minneapolis (+2.55 percent), and Charlotte (1.59 percent).
What People Are Saying
Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, said in a statement shared with Newsweek: “August’s data shows U.S. home prices continuing to slow. 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.”
Realtor.com Senior Economist Anthony Smith said in a statement shared with Newsweek: “While borrowing costs remained elevated, they were less volatile than earlier in the year, helping to stabilize buyer sentiment. Still, many prospective buyers stayed sidelined due to high monthly payments and constrained affordability, limiting the pool of active shoppers and dampening momentum in several major markets.”
“Regionally, markets in the Northeast and Midwest continue to perform relatively better, supported by tighter resale supply and steadier demand. Cities such as New York City, Chicago and Cleveland stand out among the 20‑city composite for their above‑average price gains.
“By contrast, many metros in the Sun Belt and West, including Tampa, Phoenix and Las Vegas, are showing clearer signs of softening: inventory is recovering more rapidly, homes are taking longer to sell, and price cuts and delistings are becoming more prevalent, indications that leverage may be shifting slightly toward buyers in those areas.”
What Happens Next
The regional divide that characterized the U.S. housing market this summer is likely to continue, with the South and the West continuing seeing a more dramatic correction than the Northeast and the Midwest.
“As home prices cool and mortgage rates come down, home shoppers are finding some improvement in affordability,” Bright MLS Chief Economist and mortgage veteran Lisa Sturtevant said in a statement shared with Newsweek.
“Conditions are very different depending on what market you are looking at. Some of the highest-cost markets, including New York and Boston, are still seeing healthy price gains because these regions have strong local economies and high-wage jobs, along with still-limited inventory,” she added.
“It will be important to watch local economic conditions, including unemployment rates, job growth, big employer layoffs or hiring freezes, to help gauge which markets are likely to see cooler prices in the fourth quarter.”
