National home price growth is decelerating—just look at this chart

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For much of 2024, we’ve seen a slow deceleration in the year-over-year rate of change for national home prices.

Year-over-year shift (i.e., 12-month shift) in national home prices 👇

Case-Shiller —> +4.3% (decelerated from +6.2% in January 2024)

FHFA —> +4.2% (decelerated from +6.7% in January 2024)

Freddie Mac —> +3.6% (decelerated from +6.7% in January 2024)

Zillow —> +2.4% (decelerated from +3.6% in January 2024)

Click here to view an interactive of the chart below

What’s going on?

After a brief correction in national home prices during the second half of 2022—mostly in prominent Western housing markets amid the mortgage rate shock—national home price indices stabilized in early 2023. That stabilization occurred in an environment where active inventory remained tight and far below pre-pandemic levels.

Fast-forward to 2024, and Sun Belt housing markets, in particular, have begun to soften again. Strained housing affordability and slowed migration have suppressed housing demand. That reduced housing demand, combined with competition from homebuilders—who, where and when needed, are using affordability adjustments like buydowns to maintain sales—has caused active inventory in the resale market to rise year-over-year, especially in Sun Belt markets.

Will this deceleration soon bottom out? Or could we actually see some year-over-year national home price declines again?

The key factor to watch will be active inventory and months of supply in early 2025 as we approach the spring selling season. If inventory doesn’t decline as much as seasonally expected in the coming months and starts to rise more quickly than usual in early 2025, it could signal further softening in the market.

On Tuesday, Zillow reported that U.S. home prices as measured by the Zillow Home Value Index fell -0.3% month-over-month between the September 2024 reading and the October 2024 reading.

That’s a softer than normal month-over-month print for this seasonal window (which has averaged +0.0% since 2000).

For the Zillow Home Value Index 👇

Year-to-date —> +3.4% 

Year-over-year —> +2.4% 

Since the 2022 peak —> +2.6% 

Since March 2020 —> +44.6% 

7.01% —> Today’s average 30-year fixed mortgage rate as calculated by Mortgage News Daily

Range this year: 6.11% (lowest reading) ←→ 7.52% (highest reading)

255 bps —> Today’s “spread” between the 10-year Treasury yield and the 30-year fixed mortgage rate

The rate borrowers may qualify for (if eligible) can vary greatly from the daily average published by Mortgage News Daily. Many factors, including credit score, can affect this. ResiClub uses this “average” as a proxy for how the mortgage market is shifting—and how quickly.