Home price growth slows, affordability pressures persist

U.S. home price growth remained muted in October as high mortgage rates and affordability constraints continued to weigh on the housing market, according to data released Tuesday by S&P Dow Jones Indices.

The S&P Cotality Case-Shiller U.S. National Home Price Index rose 1.4% from a year earlier — up slightly from a 1.3% annual increase in September.

Despite the modest uptick, price growth remains near its weakest pace since mid-2023 and continues to trail consumer inflation.

Annual gains were less than one-third of the 5.1% average home price increase recorded in 2024 and lagged estimated October consumer inflation of roughly 3.1%.

Mortgage rates, affordability and 2026 outlook

Lower mortgage rates in October may have contributed to the slight increase in annual price growth, according to Bright MLS Chief Economist Lisa Sturtevant.

She also cautioned that affordability challenges remain significant.

Looking ahead, she said affordability conditions are likely to improve gradually rather than dramatically.

“Affordability should continue to improve in 2026 through a combination of lower mortgage rates and slower price growth and even price drops in some metro areas. But we should not expect significant gains in affordability in the year ahead,” Sturtevant said.

She added that falling rates could also have unintended effects on prices.

“Today’s Case-Shiller Home Price Index suggests that lower rates could even lead to upward pressure on prices in some markets,” she said.

Regional divergence

The October data highlighted growing regional differences across the housing market.

Chicago recorded the strongest annual price increase among the 20 cities tracked — rising 5.8%, followed by New York at 5.0% and Cleveland at 4.1%.

Tampa, Fla., posted the steepest decline, with prices falling 4.2% from a year earlier.

“Regional performance underscores a striking geographic rotation,” said Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices. “It’s a stark reversal from the pandemic boom, as the markets that were once ‘pandemic darlings’ are now seeing the sharpest corrections while more traditional metros continue to post modest gains.”

Sturtevant pointed to similar geographic patterns.

“(Prices) were also down in Phoenix, Dallas and Denver, where inventory has been increasing and demand has pulled back since the pandemic.”

Momentum stalls with borrowing costs

On a month-over-month basis, housing momentum weakened further.

Before seasonal adjustment, the national index and both composite indexes declined in October.

Sixteen of the 20 cities saw prices fall from September — with Cleveland, Boston, Seattle and Denver posting declines of roughly 0.8% to 1.0%.

“Short-term momentum has essentially stalled,” Godec said. “Would-be buyers are facing the highest borrowing costs in decades, and that affordability squeeze has curbed demand enough to erode price momentum across most of the country.”

After seasonal adjustment, the national index rose 0.4%, while the 10-city and 20-city composite indexes each increased 0.3%.

The October release did not include updated data for Detroit due to transaction recording delays in Wayne County, Mich.

S&P Dow Jones Indices said there was sufficient information to calculate a valid September update and that missing months will be revised as additional transactions are recorded.

Uneven buyer conditions

Despite ongoing challenges, Sturtevant said opportunities for buyers may improve unevenly across regions next year.

“While opportunities for first-time buyers could be better in 2026 than they have been in years, conditions will vary significantly across regions, with buyers having more leverage in markets in parts of the South, West and Pacific Northwest, while inventory will remain tight and markets will remain competitive in the Midwest and Northeast,” she said.

The S&P Cotality Case-Shiller indices track repeat sales of single-family homes across major U.S. metropolitan areas — with more than 27 years of historical data available.