Case-Shiller index shows home price growth cooled further in January

Home price growth continued to cool at the start of the year, according to the S&P Cotality Case-Shiller Index released on Tuesday.

The national home price index rose just 0.9% annually in January to a reading of 326.61, down from the 1.1% yearly increase recorded in December. Both the 10-city composite index (357.44) and the 20-city composite index (336.64) also showed softer home price appreciation in January rising on an annual basis just 1.7% and 1.2% respectively, down from annual increases of 2.0% and 1.4%, respectively, a month prior.

When looking at current HW Data, we find that both datasets show cooling price growth, with HW Data indicating actual price declines in listing prices year-over-year.

On a monthly basis, after seasonal adjustment, all three indices reported a month-over-month gain of 0.2%.

Looking back at 2025, Nicholas Godec, the head of fixed income tradables and commodities at S&P Dow Jones Indices, said splitting the year into two halves helps provide a clearer picture to where we started 2026.

“The National Index rose 2.2% over the first six months of the period, then fell 1.3% over the most recent six — a swing that explains why annual gains have compressed to under 1% despite prices remaining historically elevated,” Godec said in a statement.

Lisa Sturtevant, the chief economist at Bright MLS, added that the data for January marks the weakest start to a year for home prices since the early 2010s. 

“While mortgage rates reached their lowest levels in more than three years in early 2026, the reprieve on rates was short-lived as the conflict with Iran has driven rates up in recent weeks. Affordability continues to be a major constraint on the housing market,” Sturtevant said in a statement. “Prospective buyers are waiting for both lower rates and slower price growth and are increasingly asking for concessions from sellers, leading to a more balanced negotiating environment between buyers and sellers.”

January also marked the eighth consecutive month inflation outpaced annual home price growth, as the Consumer Price Index was up 1.5 percentage points compared to the 0.9% yearly increase for home price appreciation.

“In real terms, home values have declined modestly over the past year,” Godec said.

Among the 20 cities in the 20-city index, New York moved up one place from December to take the top-spot recording the largest annual price gain at 4.9%, followed by December’s frontrunner Chicago at 4.6% and Cleveland at 3.6%. At the other end, Tampa yet again posted the largest annual decline, falling 2.5% in January, followed by Denver (-2.05%) and Phoenix (-1.59%).

When looking at current HW Data, the Northeast/Midwest strength and South/West weakness pattern identified in Case-Shiller data appears to persist, though current market conditions show more seller-favorable dynamics than the Case-Shiller price trends might suggest.

Market Dynamics: While Case-Shiller shows price cooling, current inventory levels (2.4 months supply) and market action indices suggest markets remain relatively tight, supporting the “supply shortfall” narrative mentioned in the article.

Price Reduction Activity: The 34% of listings with price reductions from HW Data aligns with the Case-Shiller observation about buyers increasingly asking for concessions.

The data suggests the cooling trend identified in January Case-Shiller data has continued into March 2026, with listing prices now showing year-over-year declines nationally.

“The national average masks a stark regional divide that continues to define the 2026 housing market. Markets in the Northeast and Midwest continued to post year-over-year home price gains,” Sturtevant said. “Prices fell in markets where inventory has increased the fastest and where demand has cooled.”

As economists look ahead, they say the outlook for the spring housing market remains iffy. 

“While there had been promising signs that affordability was improving, higher rates and growing uncertainty are creating headwinds in the market. Even with cooler demand, home prices are likely to be stable this spring due to the ongoing supply shortfall,” Sturtevant said. “However, expect significant variation across markets, with stronger price appreciation in the Northeast and Midwest where inventory remains constrained, and slower price growth and price declines in markets in the South and West where inventory has climbed.”