The rise in prices of single-family homes in the United States slowed in December, but economists believe that the lack of inventory could prevent a total decline in home prices nationally.
Home prices increased by 0.1% after a revision to the 0.7% increase in November, the Federal Housing Finance Agency announced on Tuesday. Prices had previously risen by 0.6% in November. Over the 12-month period ending in December, prices increased by 1.8% after a 2.1% increase in November. They rose by 0.8% in the fourth quarter.
Supply remains limited, especially for entry-level homes, which drives prices up and keeps the dream of 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 policies on trade and immigration, which have raised construction material prices and reduced labor supply, have limited builders’ ability to accelerate home construction, according to economists and professional groups.
Last Friday, the United States Supreme Court overturned the import tariffs imposed by Mr. Trump under a law intended for use in national emergencies. Mr. Trump quickly imposed global tariffs of 10% for 150 days to replace some of the emergency tariffs before increasing the rate to 15% on Saturday.
Land available for building is also scarce due to state and local regulations. Although mortgage rates have declined in recent weeks, economists believe there is limited room for further decreases, citing concerns about federal government debt that are keeping U.S. Treasury yields elevated.
Mortgage rates follow the yield on the 10-year Treasury. Labor market conditions are also too sluggish to boost demand.
Residential investment, which includes home construction and sales, has declined for four consecutive quarters.
Monthly housing price inflation in December was dampened 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 increased in the Atlantic region.
Significant increases were recorded in the Mountain and Northeast Central regions. On an annual basis, prices decreased 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.
