Home Prices Expected to Rise Slowly in 2025

According to data from S&P Dow Jones Indices, home prices are projected to increase by only 1.3% in 2025, marking the slowest growth rate in over 15 years.

The S&P CoreLogic Case-Shiller National Home Price Index recorded a 1.3% rise in December compared to the same month last year, a slight drop from 1.4% in November. Overall, national home prices also saw a 1.3% increase for the entire year, which represents the slowest full-year rise since 2011, a year when prices fell by 3.9%.

This slowdown contrasts sharply with the rapid price increases seen during the Biden administration, where annual growth rates often surpassed 10% in 2021 and 2022. The anticipated growth rate in 2025 is notably lower than the average annual increase of 6.6% that was recorded over the past decade.

In 2025, inflation is expected to be around 2.7%, which is significant because it indicates that home price growth is lagging behind the overall rise in living costs for the first time in more than ten years. This trend suggests that wages and savings have become more pivotal relative to housing costs, contributing to improved housing affordability.

As the 2024 election approaches, housing affordability is rising as a major concern for voters. An October 2024 survey by Redfin found that 82% of potential homebuyers said their voting decision would be influenced by affordability issues, as increasing prices have led many Americans to give up on the idea of owning a home.

“National home prices grew by just 1.3% for the year, the slowest full-year increase since 2011,” noted Nicholas Godek, who leads fixed income trading and commodities at S&P Dow Jones Indices. “Two structural forces have reshaped the market in recent years: mortgage rates and inflation.”

Additionally, the Trump administration’s immigration policies may have contributed to stabilizing the U.S. housing market, as the departure of hundreds of thousands of undocumented immigrants has potentially increased supply for legal residents.

The 30-year mortgage rate closed out 2025 at 6.15%, which is significantly lower than 6.85% from the previous year and much less than the 7.8% reached during Biden’s third year in office.

The 10-city home price index saw a year-on-year increase of 1.9%, reaching 357.32, while the 20-city index grew by 1.4%, climbing to 336.89. Both indexes, however, showed a slight decrease of 0.1% month-on-month when adjusted for seasonal variations.