Housing Market Slump: Is Homeownership Losing Its Value?
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Housing Wealth erosion: Home Prices Lag Inflation, signaling a Market Shift
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(Last Updated: October 26, 2023)
For many Americans, the dream of homeownership feels increasingly out of reach. High home prices and elevated mortgage rates have created an affordability crisis, but a more subtle shift is underway: the ability of housing to build wealth is diminishing. Even as home prices remain near record highs, they are now falling behind the rate of inflation, a concerning trend not seen as mid-2023. This marks a significant departure from the pandemic-era boom, where housing was a primary driver of wealth accumulation.
The Numbers: A Declining Trend
The latest data from S&P CoreLogic Case-Shiller reveals a concerning pattern. The 20-city composite index experienced a 0.3% decline in June, marking the fourth consecutive monthly drop.
| Index | Annual Change (July 2023) | Annual Change (june 2023) |
|————————|—————————|—————————|
| 20-City Composite | 2.1% | 2.8% |
| National Index | 1.9% | 2.3% |
| Consumer Price Index (CPI) | 2.7% | N/A |
Source: S&P dow Jones Indices, U.S. Bureau of Labor Statistics
This slowdown is stark when compared to the rapid price thankfulness seen during the pandemic. At that time, home values were increasing at double-digit annual rates, considerably outpacing inflation and building substantial real wealth for homeowners. Now, the situation has reversed.
Housing Wealth in decline
“For the first time in years, home prices are failing to keep pace with broader inflation,” explains Nicholas Godec, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices. “during the pandemic surge, home values were climbing at double-digit annual rates that far exceeded inflation, building substantial real wealth for homeowners. 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.”
This means that even though nominal home prices may still be high, the real value of that equity is shrinking when accounting for the rising cost of goods and services.
Weak Demand and a disappointing Selling Season
The weakening price growth reflects underlying demand that remains muted,despite the spring and summer months traditionally being the peak of the homebuying season. This year’s selling season has been largely unsuccessful.
existing Home Sales: While sales have seen slight increases recently, they remain subdued overall.
New Home Sales: Are slumping, with prices also experiencing declines.
These conditions are so challenging that Mark Zandi,Chief Economist at Moody’s Analytics,has expressed concerns about the housing market’s outlook. (See related article: https://fortune.com/2025/07/20/housing-market-outlook-sales-home-prices-starts-slump-homebuilders/)