Monthly Trends Show Tepid Momentum
Month-over-month readings reflected a slower pace of appreciation. The seasonally adjusted Case-Shiller National Index rose 0.6% in January, while the FHFA Index posted a modest 0.2% gain. Notably, the 10-City and 20-City Composites from Case-Shiller both rose 0.5% on a seasonally adjusted basis. On a non-adjusted basis, gains were smaller at just 0.1%.
Regionally, FHFA data showed wide dispersion. The West North Central division rose 1.0% month-over-month, while the South Atlantic declined 0.8%. This reflects cooling in some previously high-growth areas such as Tampa and San Francisco, both of which logged six-month declines exceeding 3%, according to Case-Shiller.
Affordability Pressures and Inventory Constraints Weigh on Growth
S&P’s analysis attributes recent moderation to higher mortgage rates, which have pushed affordability to multi-decade lows. Combined with limited inventory in key metros, this has led to subdued buyer activity and uneven regional performance. Sunbelt metros that experienced earlier surges, such as Phoenix and Tampa, are now showing marked deceleration, while more affordable, supply-constrained markets in the Northeast remain resilient.
Market Outlook: Neutral to Mildly Bullish Near-Term
Despite signs of cooling, home prices remain historically elevated, with long-term equity gains intact. Traders should note the bifurcation between resilient urban cores and retreating Sunbelt regions. With mortgage rates likely to remain restrictive and regional divergence persisting, near-term price action is expected to remain neutral to mildly bullish—supported by low inventory and strength in select metros.
