Real Estate·HousingThe housing market is no longer a wealth-building engine as prices continue to slumpBy Jason MaBy Jason MaWeekend EditorJason MaWeekend EditorJason Ma is the weekend editor at Fortune, where he covers , the economy, finance, and housing.SEE FULL BIO A for sale sign outside of a for sale on Aug.
16 in Los Angeles.Patrick T. Fallon—AFP via Getty Images prices aren’t keeping up with inflation, representing a drag on wealth in real terms, according to S&P Global.
That’s as prices have been falling on a monthly basis, while President Donald Trump’s tariffs have kept inflation sticky and still-high mortgage rates have weighed on demand.
High prices and mortgage rates have created unaffordable conditions for many Americans, but the housing market’s ability to create more wealth has sputtered.
That’s because even as prices continue to hover around record levels, they are also edging lower and lagging behind the rate of inflation, which has heated up amid President Donald Trump’s tariffs.
“For the first time in years, prices are failing to keep pace with broader inflation,” said Nicholas Godec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, in a statement on Tuesday.
The last time that happened was mid-2023. The S&P Cotality Case-Shiller price data showed that the 20-city index fell 0.3% in June from the prior month, marking the fourth consecutive monthly decline.
On an annual basis, the 20-city composite was up 2.1%, down from a 2.8% increase in the previous month, and the national index saw a 1.9% yearly gain, down from 2.3%.
Meanwhile, the consumer price index rose 2.7% in June from a year ago.
“This reversal is historically significant: During the pandemic surge, values were climbing at double-digit annual rates that far exceeded inflation, building substantial real wealth for owners,” Godec added.
“Now, American housing wealth has actually declined in inflation-adjusted terms over the past year—a notable erosion that reflects the market’s new equilibrium.” Weak prices suggest underlying housing demand remains muted, he said, despite the spring and summer historically being the peak period for buying.
In fact, this year’s selling season has been a bust. While sales of existing s have ticked up recently, they are still subdued and prices are flat.
In addition, sales of new s are slumping with prices down. Conditions have been so dire that Moody’s Analytics chief economist Mark Zandi sounded the alarm on the housing market even louder last month.
In Godec’s view, the recent shift in the housing market could represent a new normal—but one that also has a positive angle.
“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 said.
That’s as pandemic-era hot spots in the Sun Belt have cooled off with demand increasingly tilting toward established industrial centers that enjoy sustainable fundamentals employment growth, greater affordability, and favorable demographics.
“While this represents a loss of the extraordinary gains owners enjoyed from 2020-2022, it may signal a healthier long-term trajectory where housing appreciation aligns more closely with broader economic fundamentals rather than speculative excess,” Godec added.
Meanwhile, analysts at EY-Parthenon sounded gloomier the housing market in a report that also came out on Tuesday, predicting that prices will turn negative on an annual basis by year-end due to low demand and rising inventories.
listings are up 25% from a year ago, and inventories have risen for 21 consecutive months. builders are also cautious given that demand is under pressure and construction costs are still elevated.
“Looking forward, the housing market is expected to stay stagnant, as slowing income growth and persistently high borrowing costs continue to limit demand,” the EY report said.
“While posed changes to the regulatory environment can help imve builder sentiment, elevated construction costs due to higher tariffs along with ample inventories will continue to constrain construction activity.” Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world.
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