NEW YORK — U.S. home prices continued to rise in December, but the national numbers obscured big differences beneath the surface.
Nationwide, home prices grew 3.9% in December from a year earlier, up from a 3.7% annual gain in the previous month, according to the latest S&P CoreLogic Case-Shiller Index data released on Tuesday.
The index’s composite of the 20 largest metro areas posted a year-over-year increase of 4.5%, up from a 4.3% increase in the previous month.
The U.S. housing market is experiencing regional imbalance, with home prices rising in the Northeast, led by cities like Boston and New York, which again reported the biggest annual price gain among the cities, with a 7.2% increase in December. In those cities, rapidly rising prices are adding more property value for homeowners, but increasing burdens for home buyers.
Meanwhile, the Western and Southeast cities like Tampa and New Orleans, are seeing prices decline, which could mean more affordability for home buyers, but could also signal economic slowing demand in those areas.
“The Northeast continues to lead all regions with above-trend growth, led by New York for the eighth consecutive time,” Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, said in a press release. “Boston reached an all-time high, the only market to do so for the period ended December 2024.”
The report signaled that housing demand remains strong overall, but regional differences in economic conditions have led to uneven growth. Factors like mortgage rates, inflation, and uncertain policy could potentially affect the financial stability for sellers and buyers.
Though the S&P CoreLogic Case-Shiller Index continues to highlight the upward trend of home prices nationally, it remains weaker than pre-pandemic normal, compared to roughly 5% annual increase in 2019.
However, Tampa was the only city tracked by the index that saw prices decline outright, falling 1.1%, reflecting broader issues in the Southeast where supply is increasing while demand is faltering. The post-pandemic correction, rising insurance costs, and hurricane impacts also contribute to the region’s housing market struggles.
“As a result, disinflationary pressures are emerging from the housing market in the Southeast,” said Troy Ludtka, an economist at SMBC Nikko Securities America Inc.
The modest increase in home price growth nationally suggests buyers were responding to mortgage rates’ decrease starting from late summer and early fall. Interest rates on a 30-year fixed-rate mortgage fell to 6.08% in September, down from 7.22% in May.
Since then, however, mortgage rates have crept back up, and they may stay high for some time to come. With rising inflation risk under President Donald Trump’s tariffs, Fed Chair Jerome Powell has previously said the bank was not “in a hurry” to cut more, given significant uncertainty about where the economy might be headed. That will have a direct impact on mortgage rates, which could cool off the housing market.
“Interest rates are high enough to actively slow down economic activity, and eventually that will register through lower growth,” Ludtka said, “on top of that, the situation where the policy cocktails are greatly uncertain.”