National prices barely moved in 2025 as inventory reshaped winners and losers
United States home prices ended 2025 almost where they started, marking a sharp comedown from the breakneck gains of the pandemic era and underscoring a market increasingly defined by inventory, not urgency.
According to the December 2025 Home Price Index (HPI) from First American Data & Analytics, annual home price appreciation held below 1% for a fifth straight month, with December’s 0.5% yearly gain the slowest since 2012.
Month to month, prices slipped 0.2%, leaving national values “nearly unchanged” for the year as income growth finally began to outrun home price gains.
“As we close out the year, the market’s fault line is inventory,” said Mark Fleming, chief economist at First American. “Across the top 30 markets we track, prices are flat or declining in 20 markets, and among the 10 markets still posting year-over-year gains, eight are in the Northeast or Midwest—areas where supply has generally remained tighter.”
“From a national house price perspective, it’s almost like 2025 didn’t happen – prices finished the year nearly unchanged,” Fleming said.
“With annual price growth at 0.5% in December—the slowest since 2012—the housing market nationally has found a more balanced state, allowing affordability a chance to gradually improve as household income growth outpaces price appreciation.”
Affordability and income gains
First American’s read on affordability echoed other industry gauges. A December report from the Mortgage Bankers Association showed the typical monthly payment on new purchase applications in November was nearly $100 lower than a year earlier, after six straight months of declines. That trend, combined with cooling prices, helped some buyers re-enter the market even with mortgage rates still elevated.
“I think part of it, too, is realistic expectations,” Matt Gouge, mortgage broker and mortgage consultant at Answer Home Loans told Mortgage Professional America.
“As a first-time homebuyer, you shouldn't expect four bedrooms, three baths, 2,800 square feet. A starter home is a starter home. There have been a lot of people who have had to just come to terms with the realization that, ‘I'm going to buy less house than maybe I want or I dreamed of.’ But this is the first house. This is a stepping stone.”
Regional split widens
First American reported that Warren, Mich., led annual gains, with its overall HPI up 4.2%, followed by New York, Cambridge, Mass., St. Louis and Baltimore, all posting increases between 2.3% and 2.8%.
Starter homes in Warren posted particularly strong gains, rising 6.9% year over year.
By contrast, some of the standout boom markets of the pandemic era saw the sharpest pullbacks. Oakland, Calif., recorded a 6% annual drop in its HPI, while Denver, Miami, Austin, Texas, and Riverside, Calif., saw declines ranging from 3.4% to 4%.
In several of these metros, inventory built up as sellers came back to the market and buyers balked at prices set during the frenzy.
What it meant for mortgage professionals
The 2025 pattern of flat national prices masked a more complex operating environment. Volume opportunities shifted toward markets where tight supply still supported modest appreciation and to segments where softer prices and lower monthly payments opened a narrow affordability window for first-time buyers.
Fleming argued that the new landscape looked less like a correction and more like normalization.
“Where inventory has grown, particularly in several pandemic-era boom towns like Austin, Texas and Phoenix, prices are adjusting lower as the market normalizes,” he said.
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