- by New Deal democrat
In the past month, all of the various home price indexes have confirmed abating inflation in the shelter sector. This morning the FHFA and Case Shiller house price indexes were updated through December. Last week we got price information for new houses, and earlier in the month for existing homes. In this post I’ll update all of them. My emphasis is on a rebalancing of the housing market between new and existing homes in the context of a housing shortage that caused prices to spike in the post-pandemic period.
On a seasonally adjusted monthly basis, the Case Shiller national index (blue in the graphs below) rose 0.4%, while the FHFA purchase only index (red) rose 0.1% for the October through December period. This is the fifth straight seasonally adjusted increase, after 4-5 months of seasonally adjusted declines earlier in 2025 [Note: as per usual, FRED has not updated this month’s FHFA readings yet]:
So it is safe to say that the downtrend earlier in 2025 has reversed, although the increases are at their 2023-24 pace, and not the price spike of 2021-22.
Here is the equivalent monthly graph for new home sales (gold), which unfortunately are not seasonally adjusted. These increased 4.2% for the month of December, which is within their range of monthly noise - and in fact less than their increase in December one year ago:
But on a YoY basis, the trends in all three indexes continue to be very subdued, with the Case Shiller Index up only 1.3% and the FHFA index up 1.7%, lower than their YoY increases at any point since the pandemic with the exception of a brief period in 2023. Meanwhile the YoY median price of new houses *declined* -2.0% (note I show new home prices quarterly as well as monthly in order to smooth out noise):
Although I won’t bother with the long term historical graph this time, the YoY gain in the FHFA Index is the lowest in the past 35 years outside of the 2007-11 housing bust and 2 months in 1993, while for the Case-Shiller national index it is the lowest except for the 2007-11, housing bust, the 1991 recession, and briefly in 2023. Although new home prices are, as shown above, much noisier, they display a similar pattern.
In a similar vein, the monthly change in existing home prices is not seasonally adjusted. These declined -2.0% in December, typical for that month. Here is a look at the past 10 years:
Although I can’t show you a YoY graph, the change for 2025 was only 0.9%.
In summary, prices for existing homes were up 0.9% YoY, and repeat sales of existing homes were only up 1.3% and 1.8%; while the prices of new homes actually continued to decline.
Finally, let’s take a look at affordability. The below graph shows average weekly earnings for nonsupervisory workers compared with the Case-Shiller, FHFA, and new homes price information, all normed to 100 as of just before the pandemic:
As of the end of 2025, average weekly earnings have increased 32.9%, while repeat home sales prices have increased 53.6% and 56.9%. In other words repeat home sales prices have increased over 20% more than average weekly wages since before the pandemic. The median price for an existing home (not shown) has increased by 47.0% over that same period. By contrast, the price decreases of the past several years mean that the median new home has sold for only 24.9% more than just before the recession, or about -8% less than average wage gains.
So if we continue to see a very gradual rebalancing of the housing market between new and existing home prices, but we simply need much more new and existing home inventory to bring down median prices to the pre-pandemic level (not to mention the issue with mortgage rates, but that’s another story).
