Home price performance rose at muted levels last month amid a pronounced slowdown in appreciation that began in 2025.

Sluggish demand fueled by steep purchase affordability challenges has continued that cooling trend in 2026. Affordability challenges have been exacerbated by steadily rising mortgage rates since the Iran war began in late February.

Fannie Mae’s Home Price Index (HPI), which tracks values on mortgaged repeat home sales, posted annual growth between roughly 5% and 6.5% every month from 2016 to mid-2020. At that point, annual growth never fell below 9% for any month until October 2022, with the index peaking at 13% or higher every month from March 2021 to July 2022.

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Annual HPI price growth has now been below 3% since June 2025, however, rising just 2.4% above year-ago levels during August, the government-sponsored enterprise reported Tuesday. That reflected 0.3% growth from the previous month, matching the pace of growth in July, after no annual gains in June.

Home sales have been at multidecade lows for four years following multiple years of double-digit price appreciation during the COVID-19 pandemic. The latest housing projections call for equally challenging market conditions in 2027, with Fannie forecasting average 30-year mortgage rates around 7.5% all year.

Combined with a glut of sellers compared to buyers, flagging purchase demand signals a strong likelihood for additional downward price pressure next year.

Home builder sentiment — which has been overwhelmingly pessimistic about the new-home sales market since 2024 — dropped to its lowest level since 2012 in October, according to a monthly survey by the National Association of Home Builders. Usually performing their own price discovery before traditional sellers, 43% of builders said they cut prices this month, the highest share in six years and a jump from 38% in September.

The data signals more demand destruction may flow from weakening homebuyer affordability, though markets with steeper single-family supply shortages enjoy a firmer pricing floor.

The S&P Cotality Case-Shiller National Home Price Index, which tracks repeat sales across a broader data set of all existing single-family homes, posted annual growth of 2.1% in August compared to a year ago, according to a Tuesday update in that index. That represented an acceleration from 1.9% growth in July.

And yet, as S&P Global noted, August marked the 15th straight month that home price appreciation has lagged broader inflation — more than a year of declining prices in real terms. The consumer price index, a common inflation measure, posted annual growth of 3.4% in August.

Among the country’s largest metros, Chicago, New York and Cleveland posted the highest annual gains in August, rising 6.7%, 6.2% and 4.3% respectively. Seattle, Las Vegas and Denver posted the largest drops, where home prices fell 2%, 1.3% and 0.8%.

“With inflation at 3.4%, Brent crude near $100 per barrel and mortgage rates in the mid-to-high 6% range, households continue to face elevated costs alongside persistently high home prices,” stated Rebecca Kaufman, associate director of commodities at S&P Dow Jones Indices, in an analysis accompanying the index update.