Rising supply and weak demand trigger broad housing deceleration
Home prices in the United States are showing clear signs of cooling, with the pace of growth falling to its lowest level in nearly two years. According to the latest S&P CoreLogic Case-Shiller Index released Tuesday, national home prices rose just 2.7% year-over-year in April, down from 3.4% in March. The slowdown reflects a broader shift in market dynamics as rising inventory meets waning demand.
The index, based on a three-month average, lags slightly behind real-time market activity. More recent data from Parcl Labs suggests home prices are now flat compared with last year. The deceleration is being observed across both the 10-city and 20-city composites, with many former pandemic-era hotspots now seeing price drops or stagnation.
Sun Belt slips, Midwest and Northeast gain ground
Previously booming markets like Tampa and Dallas have turned negative, with prices dropping 2.2% and 0.2%, respectively. San Francisco remained flat, while Phoenix and Miami posted minimal gains of just over 1%.
In contrast, traditionally steady markets are now leading the pack. New York City posted the strongest annual price gain at 7.9%, followed by Chicago (6%) and Detroit (5.5%). This geographic reshuffling points to a market increasingly driven by fundamentals rather than speculative surges, according to S&P’s Nicholas Godec.
Affordability crunch hits first-time buyers
Mortgage rates, which briefly surpassed 7% in April, have kept monthly payments at elevated levels. The affordability squeeze has pushed first-time buyers down to just 30% of May’s home sales—well below their historic share of 40%, according to the National Association of Realtors.
While supply has increased, it remains below pre-pandemic levels. Only about 6% of sellers are at risk of selling at a loss, per Redfin. Despite growing inventory, the combination of high borrowing costs and limited new construction continues to put upward pressure on prices.
Market weakens but no crash in sight
Despite the current deceleration, experts don’t foresee a repeat of the post-2008 housing crash. “Housing supply remains severely constrained,” said Godec. Homeowners with ultra-low pandemic-era mortgage rates are staying put, and new construction still falls short of demand.
While the pace of price increases is slowing and some markets are experiencing slight declines, the overall picture remains one of gradual normalization—not collapse.
