If you've checked your home's estimated value on Zillow or Redfin lately and watched the number creep up again, you're not imagining things. Home prices really have risen over the past year, according to the index most economists treat as the gospel truth on this. But there's a second number buried in the same report that tells a very different story: home values have now fallen in real terms for 13 months in a row. So which number should you actually trust? Both of them, it turns out. Which one matters more depends on what you're using your home's value for.
The S&P Cotality Case-Shiller U.S. National Home Price Index, the benchmark most economists use to track home values over time, posted a 1.5% annual gain for June, according to a report S&P Dow Jones Indices published August 25. That's up from a 1.2% annual gain the month before, and it puts the national index roughly 9.3% above its 2022 peak and about 15% above the trough it hit in early 2023. Read on its own, that looks like a market that's still, slowly, climbing.
Here's the catch, though, and it's an important one. Around the same time, the Bureau of Labor Statistics confirmed that consumer prices rose 3.5% over the 12 months ending in June, in a report published in mid-July. When home prices grow more slowly than the cost of everything else, the actual purchasing power behind that home value is shrinking, even while the sale price keeps ticking upward. That's what "real terms" means, and it's why S&P Dow Jones Indices noted that June marked the 13th consecutive month home values have fallen once you adjust for inflation.
Rebecca Kaufman, Associate Director of Commodities at S&P Dow Jones Indices, framed June as a month where "lower inflation and firmer nominal home price growth" helped slow that erosion, without reversing it. In plain terms, prices are still losing a quiet race against the cost of living. They're just losing it by a smaller margin than they were a few months back.
None of this is happening evenly, either. Chicago led every major metro for the fourth straight month, with prices up 6.9% year over year, followed by New York at 4.8% and Cleveland at 4.1%. On the other end, Seattle posted the steepest annual decline at 2.0%, with Las Vegas and Denver close behind. That's nearly a nine point gap between the strongest and weakest markets in the same report. A national average is really just an average of a lot of very different local stories.
Part of what's propping up nominal prices, even as real values slide, is fairly simple. There still aren't that many homes for sale relative to demand in a lot of these markets. Mortgage rates hovered close to 6.5% through June, and homeowners who bought or refinanced at 3% or 4% a few years back have little financial incentive to sell and take out a new loan at nearly double that rate. Fewer sellers means less competition pushing prices down, even in a market where buyer demand has genuinely cooled.
So What Does "Real" Actually Mean for Your Bottom Line?
It's worth being precise here, because "real" and "nominal" get thrown around loosely. The nominal price is the number that shows up on the sale contract, the number your lender uses to calculate your loan, the number the title company uses to cut a check at closing. That number isn't shrinking. The real price adjusts that same figure for what a dollar can actually buy, and by that measure, the value you're sitting on bought a little less this June than it did last June, even though the sticker price went up.
That distinction matters more for some decisions than others. If you're planning to sell in the next few months and use the proceeds toward your next home, the nominal number is what actually shows up in your bank account, and it's genuinely bigger than it was a year ago. If you're thinking about your home as a long term store of wealth, comparing it to inflation, retirement savings, or what it would cost to replace, the real number is the more honest one. And that one has been telling you growth has been slower than the headline suggests for well over a year now.
HouseJet has been watching this gap between nominal and real home values for more than a year now, and it isn't closing quickly. That doesn't mean sellers are losing money on paper. It means the wealth building math is running a little slower than the top line number implies, which is worth knowing before you make a decision based on that number alone.
Price to your metro, not the national number. With Chicago sellers gaining nearly 7% a year and Seattle sellers losing 2%, whichever version of this headline you saw this week almost certainly wasn't describing your zip code. Ask your agent for the actual local trend, not the national one, before you settle on an asking price.
Don't let a rising nominal number talk you out of negotiating on costs. Insurance, property taxes, and basic maintenance have been climbing alongside, and in some markets faster than, home values themselves. A bigger sale price doesn't automatically mean a bigger net check if your carrying costs grew just as fast while you owned the place.
Loop in a financial professional before you treat your equity as a fixed number. A home's value, real or nominal, is an estimate until you actually sell it. Talking through what that equity means for your taxes, your next purchase, or your retirement timing with a financial advisor or accountant you trust is a more reliable step than reading any single month's index and drawing your own conclusions.
If you're selling this fall, the nominal number is the one that lands in your account, and it's still moving in your favor in most of the country, outside a handful of softening western metros. If you're buying, the real terms data is a useful reminder that you're not chasing a runaway market. Prices are barely keeping pace with everything else getting more expensive. And if you're a homeowner who isn't going anywhere right now, none of this changes your monthly payment. It just means the equity you're building is growing at a quieter pace than the headline number lets on.
A 1.5% annual gain and a 13 month real decline aren't contradictory. They're the same market, measured two different ways. Knowing which measurement actually applies to your decision is the difference between reading a headline and understanding it.
