Home price growth slowed dramatically in 2025, marking the weakest annual appreciation in more than 15 years. New data show national home prices rose just 1.3 percent, easing pressure on families squeezed by years of rapid increases. The slowdown follows steep price spikes during the Biden-era housing surge.
S&P Dow Jones Indices released figures Tuesday from the S&P CoreLogic Case-Shiller National Home Price Index showing a 1.3 percent year-over-year increase in December. That figure declined from 1.4 percent in November. For the full year, national prices rose 1.3 percent, the smallest annual gain since 2011, when prices fell 3.9 percent.
The slowdown marks a sharp reversal from 2021 and 2022, when annual gains regularly exceeded 10 percent. Over the prior decade, home prices increased an average of 6.6 percent per year. Analysts attribute the cooling trend to higher mortgage rates in recent years and broader inflation pressures that reshaped buyer demand.
Inflation measured 2.7 percent in 2025, meaning home prices rose more slowly than the overall cost of living for the first time in over a decade. In real terms, housing became more affordable as wage growth and savings modestly outpaced price appreciation. Housing affordability remained a top voter concern heading into the 2024 election cycle.
Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, said two structural forces reshaped the market: mortgage rates and inflation. The average 30-year mortgage rate closed 2025 at 6.15 percent, down from 6.85 percent a year earlier and below the 7.8 percent reached during the third year of President Biden’s term.
Regional data show modest gains. The 10-city index rose 1.9 percent year-over-year to 357.32, while the 20-city index increased 1.4 percent to 336.89. Both indexes declined 0.1 percent month-over-month before seasonal adjustment, signaling further cooling.
Some analysts note that immigration enforcement under President Trump may also be influencing supply dynamics. With fewer illegal entrants competing for housing, additional inventory may be easing upward pressure in certain markets.
After years of aggressive price growth, the latest data suggest a stabilization period for American housing. Slower appreciation, easing mortgage rates, and moderating inflation have combined to reduce the pace of price escalation, offering cautious optimism for families seeking homeownership.
