Case-Shiller, FHFA Show Home Price Gains Cooling as Sunbelt Drags, Northeast Leads

Annual Price Gains Stabilize, Led by Northeastern Metros

U.S. home prices rose modestly in January 2025, with both the S&P CoreLogic Case-Shiller and FHFA House Price Indices reporting steady annual gains. The Case-Shiller National Index advanced 4.1% year-over-year, while the FHFA Purchase-Only Index posted a slightly higher 4.8% gain. Despite seasonal headwinds and persistent affordability challenges, the market showed incremental strength, particularly in major northeastern cities.

New York, Chicago, and Boston led the 20-city Case-Shiller Composite, with annual gains of 7.7%, 7.5%, and 6.6%, respectively. Tampa was the sole decliner, down 1.5% over the year. The FHFA data further highlighted the strength of the Middle Atlantic region, which saw an 8.2% year-over-year increase—the highest among all census divisions.

Monthly Trends Show Tepid Momentum

Month-over-month readings reflected a slower pace of appreciation. The seasonally adjusted Case-Shiller National Index rose 0.6% in January, while the FHFA Index posted a modest 0.2% gain. Notably, the 10-City and 20-City Composites from Case-Shiller both rose 0.5% on a seasonally adjusted basis. On a non-adjusted basis, gains were smaller at just 0.1%.

Regionally, FHFA data showed wide dispersion. The West North Central division rose 1.0% month-over-month, while the South Atlantic declined 0.8%. This reflects cooling in some previously high-growth areas such as Tampa and San Francisco, both of which logged six-month declines exceeding 3%, according to Case-Shiller.

Affordability Pressures and Inventory Constraints Weigh on Growth

S&P’s analysis attributes recent moderation to higher mortgage rates, which have pushed affordability to multi-decade lows. Combined with limited inventory in key metros, this has led to subdued buyer activity and uneven regional performance. Sunbelt metros that experienced earlier surges, such as Phoenix and Tampa, are now showing marked deceleration, while more affordable, supply-constrained markets in the Northeast remain resilient.

Market Outlook: Neutral to Mildly Bullish Near-Term

Despite signs of cooling, home prices remain historically elevated, with long-term equity gains intact. Traders should note the bifurcation between resilient urban cores and retreating Sunbelt regions. With mortgage rates likely to remain restrictive and regional divergence persisting, near-term price action is expected to remain neutral to mildly bullish—supported by low inventory and strength in select metros.