Home prices have stalled and are failing to keep pace with broader inflation, producing a decline in inflation-adjusted housing wealth. S&P data show the 20-city Case-Shiller index fell 0.3% in June, the fourth consecutive monthly decline, with annual gains slowing to 2.1% (20-city) and 1.9% (national), while the consumer price index rose 2.7% year-over-year. Tariff-driven higher inflation and still-elevated mortgage rates have suppressed demand and priced many buyers out of the market. The spring and summer selling season underperformed expectations, leaving housing demand muted and limiting the market's ability to generate new household wealth.
High home prices and mortgage rates have created unaffordable conditions for many Americans, but the housing market's ability to create more wealth has sputtered. That's because even as home prices continue to hover around record levels, they are also edging lower and lagging behind the rate of inflation, which has heated up amid President Donald Trump's tariffs. "For the first time in years, home prices are failing to keep pace with broader inflation," said NicholasGodec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, in a statement on Tuesday.
The latest S&P Cotality Case-Shiller home price data showed that the 20-city index fell 0.3% in June from the prior month, marking the fourth consecutive monthly decline. On an annual basis, the 20-city composite was up 2.1%, down from a 2.8% increase in the previous month, and the national index saw a 1.9% yearly gain, down from 2.3%. Meanwhile, the consumer price index rose 2.7% in June from a year ago.
"This reversal is historically significant: During the pandemic surge, home values were climbing at double-digit annual rates that far exceeded inflation, building substantial real wealth for homeowners," Godec added. "Now, American housing wealth has actually declined in inflation-adjusted terms over the past year-a notable erosion that reflects the market's new equilibrium."
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