CALCULATEDRISK
By Bill McBride
In Part 1: Current State of the Housing Market; Overview for mid-August 2025 I reviewed home inventory, housing starts and sales. I noted that the key stories for existing homes are that inventory has increased sharply while sales are essentially flat compared to last year (and sales in 2024 were the lowest since 1995). That means prices are under pressure. And there are significant regional differences too.
In Part 2, I will look at house prices, mortgage rates, rents and more.
These “Current State” summaries show us where we came from, where we are, and hopefully give us clues as to where we are going!
House Prices
The Case-Shiller National Index increased 2.3% year-over-year (YoY) in May and will likely be lower year-over-year in the June report compared to May (based on other data).
The Composite 10 NSA was up 3.4% year-over-year. The Composite 20 NSA was up 2.8% year-over-year. The National index NSA was up 2.3% year-over-year.
The MoM decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.29% (a -3.5% annual rate). This was the third consecutive MoM decrease.
In the January report, the Case-Shiller National index was up 4.2%, in February up 3.9%, in March up 3.4%, in April report up 2.7%, and in May up 2.3%.
And the May Case-Shiller index was a 3-month average of closing prices in March, April and May. March closing prices include some contracts signed in January.
So, not only is this trending down, but there is a significant lag to this data.
Let’s review some more timely house price data …
Other measures of house prices suggest prices will be up a less YoY in the June Case-Shiller index as in the April report. The NAR reported median prices were up 2.0% YoY in June, up from 1.6% YoY in May. (Note that median prices are impacted by the mix).
ICE reported prices were up 1.0% YoY in July, down from 1.3% YoY in June. Freddie Mac reported house prices were up 2.0% YoY in June, down from 2.3% YoY in May. Yesterday, First American reported were up 1.5% YoY in July noting “Annual house price appreciation is at the slowest rate since March 2012.”
Here is a comparison of year-over-year change in the FMHPI, median house prices from the NAR, and the Case-Shiller National index.
The FMHPI and the NAR median prices appear to be leading indicators for Case-Shiller. Based on recent monthly data, and the FMHPI, the YoY change in the Case-Shiller index will likely be lower in June than in May.
Based on the trend, it is possible that national house prices will be down year-over-year in 2025. So far. I’m stick with my forecast of “mostly flat prices nationally in 2025”.
In real terms, the Case-Shiller National index is down 2.0% from the peak in 2022, seasonally adjusted. It has now been 36 months since the real peak in house prices. Typically, after a sharp increase in prices, it takes a number of years for real prices to reach new highs..
30-Year Mortgage Rates at 10 Month Lows
The following graph from MortgageNewsDaily.com shows mortgage rates since January 1, 2000. 30-year mortgage rates were at 6.56% on August 14th. The rate on August 13th of 6.53% (30-year) was the lowest since October 4, 2024.
Mortgage rates were low following the financial crisis through the early years of the pandemic. Now rates have returned to a new normal in 30-year mortgage rates in the 6% to 7% range.
A year ago, 30-year mortgage rates were at 6.52%, two years ago rates were at 7.24%, three years ago rates at 5.25%, and four years ago at 2.95%.
It is financially very difficult for homeowners to move and give up their 3% mortgage rates, however time and life changes are slowing leading to more listings.
Note that rates were falling in 2019 – into the high 3s – prior to the pandemic as the economy weakened in 2019.
Mortgage Purchase Applications Have Increased
Here is a graph showing the MBA mortgage purchase index released last week. Purchase application activity is up from the lows in late October 2023 and is above the lowest levels during the housing bust.
This is still very low.
And the next graph shows the refinance index since 1990. Refinance activity is still very low, but picking up a little with lower mortgage rates.
Asking Rents Mostly Unchanged Year-over-year
Here is a graph of the year-over-year (YoY) change for these measures since January 2015. Most of these measures are through June 2025, except Apartment List is through July 2025.
Asking rents are mostly unchanged YoY for multi-family and with new supply coming on the market, we will likely see continued pressure on asking rents.
Delinquencies and Foreclosures increasing Slightly
Here is a graph from the MBA’s National Delinquency Survey through Q2 2025.
The percent of loans in the foreclosure process increased year-over-year from 0.43 percent in Q2 2024 to 0.48 percent in Q2 2025 (red) but remains historically low.
The seasonally adjusted delinquency rate was essentially unchanged YoY at 3.93 percent from 3.97 percent in Q2 2024.
Overall delinquencies and foreclosures are historically low.