The rise in prices of single-family homes in the United States slowed in December, but economists believe that the shortage of inventory could prevent a total decline in home prices at the national level.
Home prices increased by 0.1% after a revision showing a 0.7% increase in November, the Federal Housing Finance Agency announced on Tuesday. Housing prices had previously risen by 0.6% in November. Prices increased by 1.8% over the 12-month period ending in December, following a 2.1% increase in November. They rose by 0.8% in the fourth quarter.
The supply remains limited, especially for entry-level homes, driving prices up and making homeownership out of reach for many Americans. The Trump administration has implemented a series of measures to improve housing affordability.
However, President Donald Trump’s aggressive trade and immigration policies, which have raised construction material and appliance prices and reduced labor supply, have limited builders’ ability to accelerate housing construction, according to economists and professional groups.
Last Friday, the U.S. Supreme Court overturned the import tariffs imposed by Mr. Trump, under a law intended for use in a national emergency. Mr. Trump swiftly imposed global tariffs of 10% for 150 days to replace some of the emergency tariffs, before raising the rate to 15% on Saturday.
Land for building is also scarce due to state and local regulations. Although mortgage rates have fallen in recent weeks, economists believe the room for further decreases is limited, citing concerns about federal government debt keeping U.S. Treasury yields high.
Mortgage rates follow the 10-year Treasury yield. Labor market conditions remain too sluggish to boost demand.
Residential investment, which includes home construction and sales, has contracted for four consecutive quarters.
Monthly real estate price inflation in December was curbed by a 1.0% decrease in the Midwest region and a 0.1% decrease in the Southeast region. Home prices remained unchanged in the Pacific region but rose in the Atlantic Central region.
Significant increases were recorded in the Mountain and Northeast Central regions. Year-on-year, prices fell in the Pacific, Mountain, and South Atlantic regions. They increased by 5.2% in the Northeast Central region and by 4.8% in the Central Atlantic region.
