What happened: Both Zillow and Case-Shiller home price indexes indicate an uptick in home price growth in December. While home prices still fell seasonally on an unadjusted basis, the decline was notably smaller than normal seasonal trend. Annual increases in home prices had been in steady decline overall, since peaking in the spring of 2024.
Looking ahead: Zillow’s Home Value Index (ZHVI) is strongly correlated with the Case-Shiller Home Price Index but is released one to two months earlier. The January data could be complicated by wildfires and unusual winter weather that disrupted home buying activity in various regions. However, the seasonally adjusted January ZHVI suggests that Case-Shiller’s National Home Price Index is likely to revert to slightly slower home price growth relative to late 2024.
Why it matters: Buyers should see cooler home price appreciation and a less competitive environment this spring. Mortgage rates nearing 7% in January seem to have affected buyers more than sellers. January data from Zillow shows new listings from sellers are up nearly 12% compared to last year, but affordability-challenged buyers have been slower to return. As a result, for-sale inventory is building, at 18% higher than last January. While competition varies by region, many buyers can anticipate price reductions on their saved listings, as nearly a quarter of listings experienced price cuts in January.