The price of single-family homes in the U.S. has been climbing upwards since first reaching a new high in February of 2022, releases by the Federal Housing Finance Agency show. The FHFA House Price Index (HPI), which tracks price appreciation (or depreciation) for single-family homes by comparing repeat sales of the same properties over time, increased to more than 441 index points in March, the latest month on record. However, home price appreciation has slowed dramatically from the 5.1 percent seen in 2024 to around 1.7-1.8 year-over-year.
The pandemic reshuffle of the housing market - which had many Americans looking to buy a house at the same time - saw prices pick up more quickly from mid-2020 onward. Between June 2022 and February 2023, the market had broken its relentless upward trajectory as mortgage rate increases put pressure on the market by deterring buyers and investors. One factor driving rates up was the Fed's measures to rein in inflation caused by responses to the war in Ukraine.
While high mortgage rates have negatively affected the U.S. housing market in the last couple of years, other factors have led to the slowing down of the HPI. Starting in June 2025, inflation has outpaced home price appreciation, eroding real home values. This reverses a decade-long trend of positive real returns. In other words, while nominal prices have risen by around 1.7 percent, the purchasing power of that increase is being eroded by inflation.
