Case-Shiller data shows real home price returns turned negative in 2025

Annual home price growth continued to cool at the end of 2025, according to the S&P Cotality Case-Shiller Index released on Tuesday.

The national home price index came in at a reading of 327.36 in December, reflecting a 1.3% year-over-year increase, down from the 1.4% yearly increase recorded in November. On a monthly basis, prior to seasonal adjustment, the national index was down 0.3%.

According to the release, inflation outpaced home price growth throughout the second half of 2025, reversing a decade-long trend of positive real returns on home prices. Overall, national home prices grew just 1.3% in 2025, marking the weakest full-year gain since 2011, when prices dropped 3.9%. Additionally, this is 5.3 percentage points below the 6.6% 10-year annual average. 

“Two structural forces have reshaped the market over recent years: mortgage rates and inflation. The 30-year mortgage rate closed 2025 at 6.2%, well above the 4.8% 10-year average and a sharp contrast to the 3.9% average that prevailed from 2016 through 2020,” Nicholas Godec, the head of fixed income tradables and commodities at S&P Dow Jones Indices, said in a statement. “ Meanwhile, annual inflation for 2025 came in at 2.7% — modestly below the 3.1% 10-year average — but still outpaced home price appreciation by 1.4 percentage points, effectively eroding real home values for most owners. This marks a notable reversal: Over the prior decade, national home prices outpaced inflation by 3.7 percentage points annually, a dynamic that has quietly reversed, with real home price returns turning negative in June 2025.”

The 10-city index also recorded slower annual home price growth in December, jumping 1.9% on a yearly basis to 357.32, while the 20-city index rose 1.4% year-over-year, the same as a month prior, to a reading of 336.89. Prior to seasonal adjustment, both indexes were down 0.1% month-over-month.

Of the 20 cities indexed, Chicago reported the highest annual price gain at 5.3% in December, followed by New York (5.1%) and Cleveland (4.0%). At the other end of the spectrum, Tampa reported the largest annual decline dropping 2.85%, followed by Denver (-2.06%) and Phoenix (-1.53%).

“This geographic divergence reflects the broader reordering underway: Historically steady Midwest and Northeast markets continued to outperform as Sun Belt markets that surged during the pandemic cycle extended their correction,” Godec said.

On a monthly basis, the only metros to post increases in December were Charlotte (0.01%), Los Angeles (0.26%) and San Diego (0.44%). Home prices remained steady in New York City month-over-month, while Minneapolis reported the largest decline at -0.70%.