• Key housing indices show annual price growth slowing to multi-year lows in September
  • Month-over-month price appreciation has effectively stalled, with FHFA HPI unchanged
  • High mortgage rates and worsening affordability are cooling demand across most markets

US home price growth decelerated sharply in September, according to data released Tuesday, with two major housing indices showing the slowest annual appreciation rates in years as elevated mortgage rates continue to dampen buyer demand.

The Federal Housing Finance Agency's House Price Index remained unchanged month-over-month in September, coming in at 0.0% compared to August's 0.4% increase. Year-over-year, the FHFA HPI rose just 1.7%, down significantly from the 2.3% annual growth recorded in August and marking one of the weakest performances in over a decade.

Meanwhile, the S&P CoreLogic Case-Shiller 20-city composite index showed similar cooling trends, edging up just 0.1% month-over-month on a seasonally adjusted basis. The annual gain of 1.4% represents the slowest pace of appreciation since 2023 and reflects a clear departure from the double-digit growth seen during the pandemic housing boom.

"The message is unchanged: prices remain higher than a year ago, but the pace of appreciation continues to slow," said one housing analyst who reviewed the data. "We're seeing the cumulative impact of mortgage rates that have more than doubled from their pandemic lows, creating stubborn affordability challenges even as price growth moderates."

The cooling trend appears broad-based, though regional disparities persist. While some areas like the Middle Atlantic region showed relatively stronger annual growth of 5.1%, the Pacific region managed only a 0.2% year-over-year increase, according to people familiar with the regional breakdown.

Market participants note that the slowing HPI growth will have practical implications for mortgage markets. The more modest appreciation means conforming loan limits for government-backed mortgages will see only a slight increase in 2026, potentially limiting some borrowers' access to lower-cost financing options.

Multiple attempts to reach officials at FHFA for additional comment on Tuesday morning were not immediately successful. A spokesperson for S&P Dow Jones Indices declined to provide further analysis beyond the published data.

The current slowdown stands in stark contrast to the 2021-2022 period when home prices surged approximately 20% annually in many markets. The shift began in mid-2022 as the Federal Reserve commenced its aggressive interest rate hiking campaign, pushing 30-year mortgage rates above 7% for much of the past year.

Inventory constraints continue to provide some support to prices, preventing more significant declines in most markets. However, transaction volumes have fallen substantially as both buyers and sellers remain hesitant in the current rate environment.

Most housing economists anticipate subdued price growth will continue through early 2026, with any meaningful acceleration contingent on mortgage rates declining from current levels. A gradual reacceleration remains possible later next year, though a return to the double-digit gains of the pandemic era appears unlikely in the near term.

Correction: An earlier version of this article misstated the prior month's FHFA HPI month-over-month figure. It was 0.4%, not 0.5%.