Annual home price appreciation ebbed to its slowest pace since 2012 in September, the tenth consecutive month of price deceleration.
As homebuyer demand adjusts to affordability constraints and more market power, the cooling trend will likely continue, says Mark Fleming, chief economist at First American Financial Corp., a real estate analytics and title insurance provider.
The company’s September 2025 Home Price Index (HPI), published Thursday, showed a 0.1% monthly decline in national home prices, and just a 1.1% rise from a year ago.
“House prices declined year over year in 19 of the 30 largest markets we track in September, demonstrating the broad downward shift in momentum,” Fleming observed in a press release, while noting regional disparities behind headline statistics.
Strong annual increases across the spectrum of starter, mid-tier and luxury priced homes hit Midwest markets like St. Louis in September, with gains of 10.3%, 4.6% and 8.2% across those respective home-price tiers in that Missouri city. Prices rose 9%, 4.4% and 4.5% across the price spectrum in Pittsburgh, while Warren, Mich., saw price appreciation of 6.9%, 3.3% and 3.1% across price tiers last month.
Fleming attributed strong price growth in these cities as part of a broader pivot while “prices are still recalibrating after years of rapid growth in pandemic darlings like Phoenix and Tampa, Fla.”
The ongoing slowdown in national home prices following roughly 50% appreciation between March 2020 and March 2022 occurs against a backdrop of reaccelerating inflation and weakening labor markets.
Federal Reserve policymakers approach their two-day policy meeting on Oct. 28 and 29 uncertain if additional rate cuts in 2025 could more negatively impact consumer prices than positively impact job creation.
Nicholas Godec, head of fixed income tradables at S&P Dow Jones Indices, noted in August how cooling home price trends present a “new equilibrium” that represents a “historically significant” reversal as inflation frayed American housing wealth in real terms.
For the first time in years, according to Godec, home prices failed to keep pace with broader inflation for the 12 months ending in June.
Rising at an annual rate of only 1.9%, according to the S&P Cotality Case-Shiller Index, the consumer price index (CPI) climbed 2.7% over the same period. First American’s HPI clocked annual home price appreciation of 1.7% nationally in June.
“Looking ahead,” Godec concluded, “this housing cycle’s maturation appears to be settling around inflation-parity growth rather than the wealth-building engine of recent years.”
A common measure of inflation, the CPI report for September scheduled for release by the U.S. Census Bureau on Oct. 15 was delayed due to the government shutdown commencing Oct. 1.
The Census Bureau issued a notice last Friday saying it had recalled some workers to release the September CPI data on Oct. 24, allowing “the Social Security Administration to meet statutory deadlines necessary to ensure the accurate and timely payment of benefits.”
The most recent government CPI report, for August, showed prices rising at their fastest pace since January, with the 2.9% increase in August driven by housing and grocery costs.
With inflation running hot and home prices running cold, national home price appreciation of 1.1% in September may represent a continued fraying of American housing wealth, exacerbated by inflationary pressures like Trump administration tariff and immigration policies.
Higher expectations for inflation would likely raise bond yields and therefore mortgage rates, adding purchase affordability pressures to homebuyers, potentially accelerating the current price-cooling trend.
Accelerated cooling amid still-high or rising inflation would amplify the losses to American housing wealth in real terms as the margin widened.
