CALCULATEDRISK
FHFA House Prices up 2.3% YoY in July
S&P/Case-Shiller released the monthly Home Price Indices for July (“July” is a 3-month average of May, June and July closing prices). May closing prices include some contracts signed in March, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).
The MoM decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.06% (a -0.8% annual rate). This was the fifth consecutive MoM decrease.
On a seasonally adjusted basis, prices increased month-to-month in 10 of the 20 Case-Shiller cities. San Francisco has fallen 8.9% from the recent peak, Phoenix is down 5.2% from the peak, and Tampa down 3.7%.
FHFA House Price Index Declined 0.1% in July
On the FHFA index: FHFA House Price Index® Down 0.1 Percent in July; Up 2.3 Percent from Last Year
U.S. house prices fell 0.1 percent in July, according to the U.S. Federal Housing (FHFA) seasonally adjusted monthly House Price Index (FHFA HPI®). House prices rose 2.3 percent from July 2024 to July 2025. The previously reported 0.2 percent price decline in June remained unchanged.
For the nine census divisions, seasonally adjusted monthly home price changes ranged from -1.2 percent in the Middle Atlantic division to +0.3 percent in the East North Central division. The 12- month changes were all positive, ranging from +0.2 percent in the Pacific division to +5.1 percent in the Middle Atlantic division.
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Here is a graph from the FHFA report comparing the annual change by region for July 2025 and 2024. Prices have risen less this year than the previous year.
We will likely see YoY price declines in some areas soon in the FHFA data.
Case-Shiller House Prices
From S&P S&P Cotality Case-Shiller Index Records Annual Gain in July 2025
The S&P Cotality Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 1.7% annual gain for July, down from a 1.9% rise in the previous month. The 10- City Composite increased 2.3%, down from a 2.7% rise in the previous month. The 20-City Composite posted a year-over-year gain of 1.8%, down from a 2.2% increase in the previous month.
New York again reported the highest annual gain among the 20 cities with a 6.4% increase in July, followed by Chicago and Cleveland with annual increases of 6.2% and 4.5%, respectively. Tampa posted the lowest return, falling 2.8%.
After seasonal adjustment, the U.S. National Index posted a decrease of -0.1%. Both the 10-City Composite and 20-City Composite Indices posted drops of -0.1%, respectively.
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“July’s results reinforce that the housing market has downshifted to a much slower gear,” said Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices. “National home prices rose just 1.7% year-over-year, down from June’s 1.9% pace and a far cry from the double-digit gains of two years ago. In fact, this is one of the weakest annual price increases in the past decade – and notably, it’s below the 2.7% rise in consumer prices over the same period. In other words, U.S. home values have essentially stagnated after inflation, marking the third straight month of real housing wealth decline for homeowners. This reversal is striking: during the pandemic boom, home prices were climbing far faster than inflation, rapidly boosting homeowners’ real equity. Now, the situation has flipped – over the last year, owning a home yielded a modest nominal gain, but an inflation-adjusted loss.
“What’s keeping price growth barely in positive territory at all is the rebound we saw earlier in 2025 offsetting a soft patch in late 2024. National home prices edged down slightly last autumn and then crept back up in the first half of this year. The net result is that July’s index level is only about 1.7% higher than a year ago. Essentially, the market experienced a minor dip and recovery within a 12-month span, leaving us with little overall appreciation. This kind of volatile plateau stands in stark contrast to the roaring price surges of 2021, and it underscores just how decisively the market’s momentum has cooled.
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This graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).
The Composite 10 index was down 0.1% in July (SA). The Composite 20 index was down 0.1% (SA) in July. The National index was down 0.1% (SA) in July.
The Composite 10 NSA was up 2.3% year-over-year. The Composite 20 NSA was up 1.8% year-over-year. The National index NSA was up 1.7% year-over-year.
And a few things to watch …
House Prices and Inventory
This graph below shows existing home months-of-supply, inverted, from the National Association of Realtors® (NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through July 2025). Note that the months-of-supply is not seasonally adjusted.
From June 2022 through February 2023, the months are in black showing that prices fell for seven months with low levels of inventory in 2022! The key reasons that prices fell in that period – even with low levels of inventory – was the rapid increase in mortgage rates (and monthly payments), and the mid-2022 surge in inventory. Some potential sellers quickly listed their homes, probably remembering what happened with house prices in the 2006 to 2011 period, but that inventory surge ended pretty quickly.
In July, the months-of-supply was at 4.6 months, and the Case-Shiller National Index (SA) decreased 0.06% month-over-month. Historically prices haven’t declined until inventory reached 6 months of supply. However, the general trend over the last year (blue dashed line) suggested we are seeing national price declines with inventory over 4 months of supply. This might have been because inventory was increasing fairly rapidly.
In the August existing home sales report, the NAR reported months-of-supply was unchanged at 4.6 months. Note that there are significant regional differences in both inventory and house prices.
Mortgage Rates
Here are the weekly 30-year mortgage rates according to the Freddie Mac PMMS since January 2020.
The July Case-Shiller report was mostly for contracts signed in the March through June period when 30-year mortgage rates average around 6.8%.
Rates have declined a little recently due to recent economic weakness. I’ve been saying for a few years that the 6% to 7% range for 30-year mortgages is the “new normal”. I’ll have more on this soon, but no one should expect rates to drop into the low 5% range (or lower) without a recession or another crisis.
Comparing to Median House Prices
Here is a comparison of year-over-year change in median house prices from the NAR and the year-over-year change in the Case-Shiller index. Median prices are distorted by the mix and repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices. However, in general, the Case-Shiller index follows the median price.
The median price was up 2.0% year-over-year in August, up from 1.0% YoY in July, and the Case-Shiller National Index was up 1.7% year-over-year in the July report. This suggests the Case-Shiller index will likely be about the same year-over-year in the August report compared to July.
Annual price changes were below expectations and will likely see further weakness in house prices in the coming months.
Inventory and months-of-supply will be the key metrics to watch for house prices.