Home price growth slows, affordability pressures persist

"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%. 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."

"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."

Price growth edged up modestly but remains near its weakest pace since mid-2023 and continues to trail consumer inflation. Annual home-price gains were under one-third of the 5.1% average increase recorded in 2024 and below estimated October consumer inflation near 3.1%. Lower mortgage rates in October may have contributed to the slight uptick, while affordability challenges remain significant and are expected to improve gradually rather than dramatically. Affordability should improve through 2026 due to lower rates and slower or negative price growth in some metros. Falling rates could also push prices higher in some markets. Regional data show strong gains in Chicago, New York and Cleveland and declines in Tampa, Phoenix, Dallas and Denver.

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