Home price growth hasn't been this slow for a decade
Prices are still going up, but 2024 ended with just 4.5% annual growth. Regionally, the Northeast is still going strong, while the Sunbelt has cooled.
Key points:
- The FHFA found that on a national basis, appreciation was down significantly in the fourth quarter, but prices continued their 12-year streak of positive annual growth.
- The pace of growth has fallen below pre-pandemic levels, which ranged from 5.4% to 6.2% between 2015 and 2019.
- One state and eight metro areas saw home prices fall year-over-year.
The sluggish housing market hasn't kept home prices from rising, but it does appear to be slowing the pace of growth. Even so, some areas continue to see double-digit gains, while others posted losses.
The year-end report from the Federal Housing Finance Agency found that U.S. home prices were up 4.5% between the fourth quarter of 2023 and fourth quarter of 2024, continuing an impressive run of positive year-over-year appreciation that began at the beginning of 2012.
The rate of appreciation has slowed considerably, however, and there are some stark regional differences. Here are 3 takeaways from the report.
Nationally, appreciation hits lowest level in 10 years
The last time annual home price appreciation was this low was in 2014, but that was followed by a period of steady growth from 2015 and 2019, when Q4 appreciation remained in the 5.4% to 6.2% range.
During the overheated markets of 2020 and 2021, prices shot up by 11.2% and 17.5%, respectively, falling sharply in 2022 as interest rates rose.
The pace of growth in 2024 was down considerably from the year prior (6.6%), but it would have been even slower if not for a 1.4% quarter-over-quarter bump in prices to close out the year.
"U.S. house prices grew at a slightly higher rate in the fourth quarter after three straight previous quarters of weaker appreciation," said Anju Vajja, deputy director for FHFA's division of research and statistics. "The price growth accelerated during the quarter as the inventory of homes for sale tightened even further."
Mississippi lags behind, while the Northeast booms
One only state — Mississippi — saw homes diminish in value between the end of 2023 and 2024, dropping 0.2%. Regionally, the South and West had more sluggish growth, with home appreciation rising between 0.5% and 2.3% in Louisiana, Arizona, Colorado, Florida, California and Texas.
But parts of the Northeast and Mountain regions experienced big jumps, led by Connecticut (up 8.32% year-over-year), New Jersey (up 8.32%), Wyoming (up 8.25%) and Vermont (up 8.09%). Rhode Island, Illinois, New Hampshire and New York also posted impressive gains in the 7% range.
Sun Belt metros struggle, but 6 cities post double-digit gains
Among metro areas, the two cities with the biggest declines were in Florida, with home values falling 6.25% in Fort Myers and 4.31% in Sarasota. Rounding out the bottom three was Austin, Texas, which saw a 2.3% drop in home prices in Q4. Austin home values are still roughly 50% higher than they were before the pandemic, however.
Five other metro areas experienced more modest year-over-year declines of less than 1%: Tucson, New Orleans, Oakland, Tampa and Wichita.
So which markets are still going strong? Six areas experienced double-digit price appreciation for the year, with Honolulu topping the list at 18.75%. That was followed by Anaheim (up 12.19%); Newark, New Jersey (up 12.16%); Lake and Kenosha Counties spanning Illinois and Wisconsin (up 11.12%); Rochester, New York (up 10.8%); and Syracuse, New York (up 10.07%).