There are many ways to measure house prices. Repeat rooms indexes such as the S&P Cotality Case Shiller Are very effective in keeping changes in the value of houses, but are very slow and remain behind the actual market. Market -based measures such as the Altos Price or the alto’s pending price are immediately and best to answer “What do houses cost today?”
These measures generally move together, but can have subtle differences in timing and noise. For this reason I like to use price per square foot as a handy, normalized size for house prices. It is immediately available, has fewer noise and controls for part of the shifting mix of properties that some price measures can cloud.
I recently looked at the weekly Altos Price-per-Square-Foot data and it emphasized an important trend that is more difficult to see in the other measures of house prices in the middle of the summer 2025: house prices are about to become negative compared to last year.
You can see in the data that house prices have a normal seasonal peak in May or June and then decrease for the second half of the year. This year, house prices peaked at $ 223/SQFT in the last week of May, about 2% above last year at the same time. These were a very light win for house price for the year, but still wins.
But after the seasonal peak of June, this data clearly shows that prices are falling faster than normal and that the line is about to fall under 2024.
I built this animation to illustrate what is happening. We start the series with a view to house prices in 2022 compared to 2021. The spring of 2022 was the tail end of the pandemic purchase raziernia. Everyone knew at the time that the rates are rising and potential home buyers were still hurried to get everything they could. Those buyers quickly drove the prices in the first and second quarter.
That question stopped cold in June 2022. In the second half of 2022, demand fell dramatically and the prices were quickly adjusted. The change was so abrupt that in the spring of 2023 the house prices were under those of the previous year. This negative change of house price can be seen here in the price-per square foot data, and this was also measured by all house price indexes, such as the Shiller Index Case, which was released a few months after the news.
At the end of 2023, the market demand was a bit normalized, enough so that the prices for the full year 2023 ended with a win.
2024 was a different story. Halfway through the year the appreciation of the home prize looked weak, but the decrease in mortgage interest in September 2024 moves the needle with buyers that the prices were stimulated in Q4. Despite the historically weak demand for Homebuyer, the house prices 2024 ended with an annual win.
And that brings us until today. House prices, as emphasized by this data per square foot, are lower every week. The seasonal decline is faster than normal and as a result it seems a few weeks after that this will be the first important indicator that shows negative changes in the home price.
Why is this finally happening when the question has been weak for three full years? It seems that three -year rising inventory ultimately built the market with sufficient supply to be larger than the lukewarm demand. So few houses were available for so long that even with historically light demand, demand still outweighs the supply. With 860,000 few family houses that are not sold on the market, we are now clearly from the Pandemic-Shortage era and back to former normal inventory levels. The supply finally wins the balance of demand/supply. (This is in a large part of the country where, especially the subgo belt, for a while of course. It took until Q3 2025 before it was true for the nation as a whole.)
Most other headlines that you read in August 2025 still show a small profit of 2-3% house price over 2024. Those data sets have not yet been moved negatively. So the headlines still say “House prices are coming new record highs.” Those headlines are at the point of changing.
When potential home buyers and sellers start hearing negative headlines, they need new insights. Sellers will have to praise strategically to stand for this curve instead of behind it. They need to know how steep this decline is. Are price drops accelerating? A lot of data will have to report in the coming weeks. Stay informed.
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