National home-price trends continued to slide in favor of homebuyers in August as annual price appreciation decelerated to its slowest pace since early 2012.
That price softening has been most apparent in the starter-home market, while prices for luxury homes have outperformed, according to the August 2025 Home Price Index published Thursday by First American Data & Analytics, a real estate market analytics firm.
“For prospective buyers, this slowdown offers a welcome breather as incomes outpace house price growth and mortgage rates ease to their lowest level of the year,” commented Mark Fleming, chief economist at First American, in a press release.
Core-based statistical areas (CBSAs) that observed the largest annual increases in home price appreciation across all price tiers in August were: New York (5.2%), St. Louis (4.4%), Pittsburgh (3.3%), Cambridge, Mass. (3.3%) and Warren, Mich. (3%).
CBSAs that experienced the largest declines in appreciation across all price tiers in August were: Oakland, Calif. (6.9%); Tampa, Fla. (5.9%); Austin, Texas (3.9%); Phoenix (3.8%); and Sacramento, Calif. (2.9%).
“In an environment where higher mortgage rates weigh heavily on first-time buyers, luxury buyers — often less affected by the rate ‘lock-in’ effect because they can pay in cash or leverage equity from a previous home sale — are driving stronger appreciation at the top end of the market,” Fleming added.
Despite the softening trend, home prices remain prohibitively expensive for typical homebuyers. Rising household expenses in August and deteriorating labor conditions that prompted the Federal Reserve to trim its benchmark borrowing rate by 25 basis points at its September policy meeting have weighed on consumers who might otherwise purchase.
According to the National Association of Realtors, the typical U.S. household earned roughly 46% less than recommended to afford a median-priced home ($439,950) in July, when employing a common measure of affordability.
Affordability challenges led to a 2.6% surge in renter households and a decline in the homeowner population during the second quarter. Less competition from owner-occupied buyers has enabled home investors to maintain their roughly 30% share of all home sales.
Improving affordability in the form of easing mortgage rates in recent weeks has spurred increased mortgage activity in the form of higher mortgage application volumes.
However, increased activity has largely been driven by larger-balance refinance borrowers as purchase buyers have been slow to respond to easing homebuying conditions.
