US Housing Market Hits Rough Patch as Home Prices Struggle To Match Inflation

Bibhu Pattnaik

August 31, 2025

The US housing market is experiencing a period of stagnation, with home prices failing to keep up with the rate of inflation, making home ownership increasingly unaffordable for many Americans.

A recent report by Fortune has highlighted that the housing market’s capacity to generate wealth is dwindling.

Despite home prices remaining at near-record levels, they are slowly decreasing and falling behind inflation rates, which have been driven up by President Donald Trump‘s tariffs.

“For the first time in years, home prices are failing to keep pace with broader inflation,” Nicholas Godec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices told Fortune.

The latest S&P Cotality Case-Shiller home price data showed a 0.3% decrease in June compared to the previous month, marking the fourth consecutive monthly decline.

Year over year, the 20-city composite was up 2.1%, a drop from the 2.8% increase seen in the previous month. In comparison, the consumer price index rose 2.7% in June from a year ago.

Also Read: For Sale, But No Takers: The US Housing Market’s Awkward Standoff

Godec also pointed out that this shift is historically significant as home values were previously rising at double-digit annual rates, generating significant wealth for homeowners.

However, the recent changes in the housing market could suggest a new trend. “Looking ahead, this housing cycle's maturation appears to be settling around inflation-parity growth rather than the wealth-building engine of recent years,” he concluded.

The stagnation in the housing market and the inability of home prices to keep up with inflation is a significant concern. It indicates a potential shift in the market dynamics, moving away from being a wealth-building engine to a more subdued inflation-parity growth.

This shift could have far-reaching implications for homeowners and potential buyers, impacting their ability to generate wealth through home ownership.

The continued impact of President Trump’s tariffs on inflation and, subsequently, on home prices, will be a critical factor to watch in the coming months.

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