CHM Blog

Home prices continue to defy gravity

“It ain’t over ’til it’s over” was never more true than the past few months, when real estate home price growth kept accelerating through the month of December and beyond, especially in the Northeast.

Realtor.com’s Ken Griffith reports on how valuations remain surprisingly resilient as nationwide, home prices grew 3.9% in December from a year earlier — more than the 3.8% gain recorded in November, according to the latest S&P CoreLogic Case-Shiller Index data recently released.

“The Northeast continued to lead all regions in growth, and home prices reached an all-time high in Boston, the only market where they did so for the three-month period that ended in December,” he says, with New York again reporting a 7.2% increase — the highest annual gain among the 20 largest cities. Chicago follows, with 6.6%; and Boston, at 6.3%. Balmy Tampa, FL, however, posted the lowest return, with prices falling 1.1% annually.

Realtor.com’s Hannah Jones explains how regional variation in the housing market means that buyers across the country face vastly different market conditions. "Markets in the Midwest and Northeast continued to see substantial demand, resulting in sustained price growth in December, while the South and West continued to soften."

Griffith also reports on how the index's composite of home prices in the 20 largest metro areas posted a year-over-year increase of 4.5%, up from a 4.3% increase in the previous month. But the continued expansion of home prices came in defiance of sluggish home sales, which were at a near 30-year low in 2024. High mortgage rates and affordability concerns pushed many buyers to the sidelines, leaving mostly the well-heeled or cash buyers to jump into the market.

The aftermath of the pandemic created some strange bedfellows, according to Griffith. “Recent home price trends show that the big Northeastern cities that suffered most during the depths of the pandemic are now enjoying a rebound, while former pandemic boomtowns such as Tampa and Phoenix, are lagging behind.”

S&P Dow Jones’ Brian D. Luke elaborates: “It has been five years since the COVID-19 outbreak took hold of the global economy, sparking unprecedented volatility, massive fiscal and monetary stimulus, and a housing market that responded to national migratory changes in how we work and where we live.”

Overall, he reports that national home prices have risen by 8.8% annually since 2020, led by markets in Florida, North Carolina, Southern California, and Arizona.

While home price growth (as measured by the Case-Shiller index) continues to outpace inflation, it is now far below the peak appreciation of 18.9% observed in 2021 and lags behind the historical average of the index, Luke notes.

"Home prices stalled during the second half of the year with markets in the West dropping the fastest," he says.

While its Golden Gates remain open, San Francisco, which saw 11% lower prices than the all-time high they reached in May 2022, felt home prices drop 4.5% during the latter half 2025. Seattle followed with a 3% decline.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates started under a little pressure today. The MBS market improved by +55 bps last week. This was enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Jobs and 3) The Fed.

1) Geopolitical: The "paused" tariffs on Mexico and Canada are set to go into effect on Tuesday as well as another round for China. The bond market will be sensitive to the actual outcome.

2) Jobs: This week we get a bunch of job and wage related data culminating in Big Jobs Friday. Overall, the stronger the jobs picture is - the worse it is for rates. But the weaker the jobs data is - the better it is for rates.

3) The Fed: After Friday we will enter the Fed's "media blackout" period leading up to the next FOMC meeting. This week we will get the Beige Book and hear from Fed Chair Powell:

03/03 Musalem.

03/04 Williams.

03/05 Beige Book.

03/06 Harker, Waller, Bostic.

03/07 Powell, Kugler, Bowman and Williams.

This Week's Potential Volatility: High

This morning markets started with some rocky trading with an overall trend of being under pressure. Volatility has started high and will likely stay that way all week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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