Home-price growth cooled slightly as the spring purchase season enters May.
The S&P CoreLogic Case-Shiller Home Price Index for February rose 3.9% year over year, a slight decrease from the 4.1% annual gain in January. Over the winter, the market benefited from declining interest rates and rising inventory, allowing some buyers to enter the market.
But this occurred before President Donald Trump’s tariff policies kicked into high gear, which pushed mortgage rates back up to 7% and cast doubt on the economy.
“Waning consumer confidence, heightened economic uncertainties and the future of household budgets are impacting the consumer housing market,” Zillow chief economist Skylar Olsen said in a statement. “Unlike its normal countercyclical behavior, these early signs of an economic downturn have not brought lower mortgage rates along with it.”
The rise in the Case-Shiller Index is largely driven by the 10 largest cities in the country. The 10-City Composite increased by 5.2% annually in February, higher than the 4.5% growth for the 20-City Composite. But each of these gains were slightly lower than the prior month.
The city driving these increases is no surprise. New York City’s year-over-year gain was 7.7%, by far the largest for February. Chicago (+6.6%), Cleveland (+6.6%) and Boston (+5.9%) also posted substantial annual increases.
Other parts of the country, meanwhile, are experiencing sagging home prices. Tampa (-1.46%) is the only city in the 20-City Composite with an annualized decline. It also saw home prices drop by 0.34% compared to January.
While 11 of the 20 cities saw prices fall between December and January, only two fell between January and February. The other one is also in Florida, as Miami‘s prices dropped by 0.27% on a monthly basis.
The outlook for the rest of the spring is murky, due in part to tariffs. Despite Trump pausing the dramatic global tariff regime he announced on April 2, markets and households responded negatively, and an astronomical 145% tariff on China remains in effect.
The future of Trump’s tariffs is also cloudy, as he and members of the administration have signaled different paths forward that are often contradictory. Public opinion has soured on tariffs, and any expectation of higher inflation could temper demand for housing.
“High housing costs and widespread economic uncertainty have curbed buyer enthusiasm,” Hannah Jones, senior economic research analyst for Realtor.com, said in a statement. “Recent data shows that concerns about job security have increased, which could make both buyers and sellers more hesitant to enter the housing market until the outlook for the economy and job market becomes clearer.”
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