US House Price Index YoY: November 2025 Release and Macro Outlook
The latest US House Price Index (HPI) year-over-year (YoY) reading for November 2025 shows a notable slowdown in home price growth, signaling shifts in the housing market and broader economic conditions. This report draws on the Sigmanomics database to compare recent data with historical trends, assess key macroeconomic drivers, and explore implications for monetary policy, fiscal outlook, and financial markets.
Table of Contents
The US House Price Index YoY for November 2025 registered a 1.70% increase, down from 2.30% in October and well below the 12-month average of 3.30%. This deceleration marks the slowest pace since early 2024 and reflects cooling demand amid tighter financial conditions and elevated borrowing costs.
Drivers this month
- Shelter costs contributed approximately 0.12 percentage points to the overall HPI growth, down from 0.25 pp last month.
- New home sales weakened, reflecting affordability constraints and higher mortgage rates.
- Regional disparities widened, with Sun Belt states showing modest gains (2.50%) versus declines in parts of the Northeast (-0.50%).
Policy pulse
The 1.70% YoY growth remains above the Federal Reserve’s 2% inflation target but signals easing price pressures in housing. This moderation may influence the Fed’s upcoming rate decisions, potentially reducing the urgency for further hikes.
Market lens
Immediate reaction: The US dollar index (DXY) dipped 0.15% following the release, while 2-year Treasury yields fell by 8 basis points, reflecting expectations of a slower pace of monetary tightening.
The HPI’s slowdown coincides with broader macroeconomic trends. Core inflation remains sticky at 3.40% YoY, while unemployment holds steady at 3.70%. Mortgage rates have risen to an average of 7.10% for 30-year fixed loans, dampening affordability and demand.
Monetary Policy & Financial Conditions
The Federal Reserve’s restrictive stance, with the federal funds rate at 5.50%, has tightened credit conditions. Higher borrowing costs have cooled mortgage applications by 12% year-to-date, directly impacting home price growth.
Fiscal Policy & Government Budget
Federal fiscal policy remains moderately expansionary, with infrastructure spending supporting construction activity. However, limited direct subsidies for homebuyers have constrained demand-side support.
External Shocks & Geopolitical Risks
Global supply chain normalization and easing energy prices have reduced cost pressures on building materials. Geopolitical tensions remain contained, limiting external shocks to the housing market.
Drivers this month
- Mortgage rate hikes reduced buyer affordability, leading to fewer transactions.
- Inventory levels increased by 5% YoY, easing upward price pressure.
- Demand shifted toward rental markets, with rental inflation rising 4.10% YoY.
Policy pulse
The Fed’s inflation target remains a key benchmark. The HPI’s slowdown aligns with the central bank’s goal of tempering shelter inflation, which accounts for roughly 30% of the Consumer Price Index (CPI).
Market lens
Immediate reaction: US equity markets showed mild gains post-release, with the S&P 500 up 0.30%, reflecting optimism about reduced inflationary pressures.
This chart signals a housing market transitioning from overheating to stabilization. The downward trend in HPI growth suggests easing affordability constraints but also points to slower construction activity ahead.
Looking ahead, the US housing market faces a mix of headwinds and tailwinds. The following scenarios outline potential trajectories for the HPI over the next 12 months:
Bullish scenario (20% probability)
- Mortgage rates decline below 6.50%, boosting affordability.
- Fiscal stimulus targets first-time buyers, increasing demand.
- Supply constraints persist, supporting price growth near 3% YoY.
Base scenario (60% probability)
- Mortgage rates stabilize around 7%, maintaining current affordability limits.
- Moderate economic growth sustains steady demand.
- HPI growth remains subdued, averaging 1.50–2.00% YoY.
Bearish scenario (20% probability)
- Economic slowdown or recession reduces buyer demand sharply.
- Mortgage rates rise above 7.50%, further curbing affordability.
- HPI growth turns negative, with declines up to -1% YoY.
Structural & Long-Run Trends
Demographic shifts, including aging populations and urban migration, continue to shape housing demand. Technological advances in construction and remote work trends may also influence future price dynamics.
The November 2025 HPI YoY reading of 1.70% confirms a cooling US housing market amid tighter monetary policy and affordability challenges. While price growth is slowing, the market remains resilient with regional variation. Policymakers face a delicate balance between curbing inflation and supporting economic growth. Financial markets have responded with cautious optimism, pricing in a potential pause in rate hikes. Investors and homebuyers should monitor mortgage rates and fiscal developments closely, as these will be key determinants of housing market momentum in 2026.
Key Markets Likely to React to House Price Index YoY
The US House Price Index YoY influences a range of markets, from equities to currencies and crypto. Housing market strength affects consumer spending, financial conditions, and inflation expectations, which in turn impact asset prices. Below are five tradable symbols with historical sensitivity to HPI movements:
- SPX – The S&P 500 index often reflects housing sector sentiment and broader economic outlook.
- USDCAD – The US dollar vs. Canadian dollar pair reacts to US economic data, including housing.
- DHI – D.R. Horton, a leading homebuilder, is directly impacted by housing market trends.
- BTCUSD – Bitcoin often moves inversely to traditional assets during inflation shifts.
- XHB – The Homebuilders ETF tracks residential construction and housing demand.
Indicator vs. SPX Since 2020
Since 2020, the US House Price Index YoY and the S&P 500 have shown a moderate positive correlation (r ≈ 0.45). Periods of rapid house price growth often coincide with equity market rallies, driven by strong consumer confidence and low interest rates. However, divergences appear during tightening cycles, as seen in 2024–2025 when rising rates pressured both housing and equities.
FAQs
- What is the US House Price Index YoY?
- The US House Price Index YoY measures the annual percentage change in residential home prices across the United States, reflecting housing market trends.
- How does the House Price Index affect the economy?
- The HPI influences consumer wealth, spending, and inflation. Rising home prices can boost economic growth, while declines may signal economic weakness.
- Why is the House Price Index important for investors?
- Investors use the HPI to gauge real estate market health, inflation pressures, and potential impacts on related sectors like construction, banking, and consumer goods.
Takeaway: The US housing market is cooling but remains a critical barometer for inflation and economic health. Monitoring mortgage rates and policy shifts will be essential in 2026.
SPX – S&P 500 index, sensitive to housing market trends and economic outlook.
USDCAD – Forex pair reacting to US economic data including housing.
DHI – Homebuilder stock, directly impacted by housing market conditions.
BTCUSD – Bitcoin, often inversely correlated with inflation and traditional assets.
XHB – Homebuilders ETF, tracks residential construction and housing demand.
The November 2025 HPI YoY reading of 1.70% marks a significant decline from October’s 2.30% and is well below the 12-month average of 3.30%. This trend reflects a sustained cooling phase after a peak of 4.80% in March 2025.
Historically, the HPI has shown strong seasonal patterns, but the current deceleration is sharper than the typical post-summer slowdown. The index’s trajectory suggests a return to more balanced market conditions after a period of rapid price escalation.