In August, U.S. home price growth slowed, driven by high mortgage rates and seasonal demand changes. The S&P CoreLogic Case-Shiller Index, a widely recognized measure of U.S. home prices, showed an annual increase of 4.2% in August, down from 4.8% in July.

This was the smallest annual increase in home prices since mortgage rates peaked in 2023, indicating that the market is beginning to cool after a period of high prices. The Federal Housing Finance Agency (FHFA) also reported that its home price index rose 4.2% year-on-year and rose slightly by 0.3% month-on-month in August.

Regional Performance & City Differences

The S&P CoreLogic Case-Shiller Index details regional performance, with New York, Las Vegas and Chicago leading with annual increases of 8.1%, 7.3% and 7.2% respectively; while Denver's annual growth rate was only 0.7%, lower than Portland for the first time.

The annual growth rates of the 10-city and 20-city composite indices were 6.0% and 5.2%, respectively, both down from previous months.

The FHFA's home price index provides further insight, showing positive annual growth in all nine U.S. census regions. Month-over-month changes in August showed mixed trends, ranging from a 0.1% decline in the Northeast Central and New England regions to a 0.9% increase in the Northwest Central region. Over the past year, the Southeast Central region led the way with a 6.3% increase, while the Southwest Central region was the slowest with a 2.4% increase.

Mortgage Rates Impact & Regional Differences

These reports suggest a broad slowdown in home price growth, driven primarily by high mortgage rates, which has led to weaker buyer demand and exacerbated affordability challenges. While the Northeast, especially New York, remains the strongest region, overall market performance appears mixed.

Brian D. Luke, an analyst at S&P Dow Jones Indices, noted that traditional blue states have outperformed red states since mid-2023, especially in the Northeast and West.

Market Outlook

Home price growth is expected to remain modest as affordability pressures persist, and could slow further if mortgage rates remain high.

Data for August showed that residential prices have risen in a restrained manner for six consecutive months, suggesting a cautious outlook for short-term price increases. Market dynamics are slightly favorable for regions with stronger economic support and good employment conditions, such as the Northeast, while other regions, especially the South, are likely to continue to experience slower growth.