Home Price Gains Lag Inflation: Homeowners Losing Out
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Home Price Appreciation Expected to Stabilize with Lower Mortgage Rates
Published: October 29, 2025, 09:19:42 AM PST
Updated: October 29, 2025, 09:19:42 AM PST
The Current Housing Market Landscape
National home prices rose 1.5% in august 2023 compared to the same month in 2022, a slight decrease from the 1.6% annual gain recorded in July, as measured by the S&P CoreLogic Case-Shiller U.S. national Home Price NSA Index [S&P Dow jones Indices]. Despite continued increases, the pace of appreciation is slowing. This deceleration is significant because it means housing wealth is eroding in real terms, having done so for four consecutive months as of august 2023.
Most metropolitan areas tracked by the index experienced month-over-month price declines in August 2023. Chicago was a notable exception, showing price gains during a typically seasonal period of decline. However, the overall weakness observed was more pronounced than usual.
The Impact of Mortgage Rates
The statement, “we may see some more stability in home price appreciation during the rest of the year as the effects of lower mortgage interest rates support increased housing activity,” suggests a direct correlation between mortgage rates and housing market stability.As mortgage rates decrease, housing becomes more affordable, possibly stimulating demand and supporting price levels. This is based on the principle that lower borrowing costs increase purchasing power.
Recent trends in mortgage rates support this outlook. According to freddie Mac, the average 30-year fixed-rate mortgage was 7.79% as of October 26, 2023, [Freddie Mac Primary Mortgage Market Survey], down from a peak of 8.09% in late october. While still elevated compared to ancient averages, this decline is expected to ease some of the pressure on potential homebuyers.
| Date | 30-Year Fixed Rate (%) |
|---|---|
| October 26, 2023 | 7.79 |
| October 19, 2023 | 7.99 |
| October 12, |