House prices rose 2.6% in the year to July, slower than inflation
FHFA's index rose 0.3% in July 2026 and 2.6% over 12 months. With consumer prices up 3.4%, that is a real fall of 0.8%. Three of nine divisions beat it.
- What happened
- The Federal Housing Finance Agency's seasonally adjusted House Price Index rose 0.3% in July 2026 and 2.6% from July 2025 to July 2026 (released September 29, 2026). Consumer prices rose 3.4% over the same 12 months, so the typical conforming-mortgage home lost 0.8% of its value in real terms.
- Why
- The FHFA index tracks the same houses selling more than once, financed with mortgages bought or securitized by Fannie Mae and Freddie Mac. It is reported in nominal dollars. Taking out the 3.4% rise in the Consumer Price Index turns a nominal gain into a small real decline.
- The numbers that matter
- +2.6%FHFA HPI, 12 months to July 2026 (released Sep 29, 2026)+3.4%CPI-U, 12 months to July 2026 (released Aug 12, 2026)−0.8%Real change in house prices, 12 months to July 2026 (calculation)5.7 ptsGap between Middle Atlantic (+6.3%) and Mountain (+0.6%)
- Why it matters
- A house is most households' largest asset and is usually bought with borrowed money. A nominal gain smaller than inflation still raises equity in dollars, but it buys less, and the region decides whether the gain was 0.6% or 6.3%.
- What happens nextas we saw it on 7 Oct 2026
- FHFA releases monthly data through August 2026 on October 27, 2026.
Three of nine divisions kept pace with the 3.4% rise in consumer prices; the national index rose 2.6%.
| Middle Atlantic | 6.3% |
|---|---|
| East North Central | 4.5% |
| United States | 2.6% |
| Pacific | 0.7% |
| Mountain | 0.6% |
American house prices rose again in July 2026, and the typical owner still lost ground. The Federal Housing Finance Agency's index was up 2.6% on July 2025. Consumer prices were up 3.4% over the same 12 months. Measured in what a dollar buys, the typical conforming-mortgage house was worth 0.8% less than a year earlier.
The national figure hides a wide spread. In the Middle Atlantic division prices rose 6.3%. In the Mountain division they rose 0.6%. Only three of the nine Census divisions outran inflation.
The July numbers
FHFA released its monthly index on September 29, 2026. On a seasonally adjusted basis, prices rose 0.3% from June to July 2026 and 2.6% from July 2025 to July 2026. The previously reported 0.0% change for June was unchanged. The index stood at 443.52 in July 2026 (January 1991 = 100), against 442.34 in June and 432.4 in July 2025.
Across the nine Census divisions, seasonally adjusted changes from June to July 2026 ranged from −0.8% in the Mountain division to +1.5% in the Middle Atlantic. Over 12 months the range ran from +0.6% in the Mountain division to +6.3% in the Middle Atlantic.
| Division | 1 month, Jun–Jul 2026 | 12 months, Jul 2025–Jul 2026 | 12 months, after CPI (calculated) |
|---|---|---|---|
| Middle Atlantic | +1.5% | +6.3% | +2.8% |
| East North Central | +0.1% | +4.5% | +1.1% |
| New England | +0.3% | +4.1% | +0.7% |
| West North Central | +0.4% | +2.9% | −0.5% |
| United States | +0.3% | +2.6% | −0.8% |
| East South Central | −0.5% | +2.4% | −1.0% |
| South Atlantic | +0.1% | +1.8% | −1.5% |
| West South Central | +0.4% | +1.1% | −2.2% |
| Pacific | +0.6% | +0.7% | −2.6% |
| Mountain | −0.8% | +0.6% | −2.7% |
A single month at division level is noisy. The Middle Atlantic's 1.5% July gain followed a 0.1% fall in June. The Pacific division, up 0.6% in July, had fallen in four of the five months from February to June. The 12-month column is the steadier guide, and even that is subject to revision.
The same report restates the prior estimates. West North Central's June change moved from −0.6% to −0.3%. New England's moved from −0.8% to −0.7%. The national February-to-March change was revised from 0.1% to 0.2%. FHFA explains that Fannie Mae and Freddie Mac buy seasoned loans, adding information about earlier periods.
From January to July 2026 the seasonally adjusted national index rose from 440.91 to 443.52, a gain of 0.6% over six months. Two of those six monthly changes were negative. Between July 2025 and January 2026 the index rose from 432.4 to 440.91, or 2.0%. Most of the 12-month gain therefore came before 2026 began.
What the index counts, and what it leaves out
FHFA's own FAQ (last updated November 2025) says the index uses “a geometric weighted repeat-sales procedure”, estimating price changes from repeat transactions on the same properties. That controls for the mix of houses sold, which is why FHFA calls it “a ‘constant quality’ index.” The flagship index is based on “transactions for single-family properties involving conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.” It also restricts data on condominiums, cooperatives, multi-unit properties and planned unit developments.
On November 25, 2025, FHFA set the 2026 baseline conforming loan limit for one-unit properties at $832,750, an increase of $26,250 from 2025. In high-cost areas the ceiling is $1,249,125, 150% of the baseline. A purchase financed with a larger jumbo loan, an FHA loan, or no loan at all is outside the flagship index.
Two further features matter for reading it. The index is nominal: the FAQ states plainly that it “is not adjusted for inflation, so it reflects nominal cumulative gains.” And it arrives late. FHFA receives data on new originations with a two-month delay, which fits the timing: July figures appeared on September 29.
A 2008 FHFA research paper set out why its index and the S&P/Case-Shiller index can diverge. Case-Shiller uses “selling prices recorded at county assessor and recorder offices”, so it is not limited to homes financed through Fannie Mae and Freddie Mac; the paper notes that recorder data include subprime, jumbo, VA and FHA loans. Case-Shiller is value-weighted, so expensive houses count for more, while FHFA's predecessor index was unit-weighted, giving each pair of sales the same weight. The paper dates from January 2008 and describes the two indexes as they were then.
A median sale price is a third kind of measure. It moves when the mix of houses sold changes, even if no individual house changes in value. The Census Bureau's median new-home price, used in our affordability arithmetic, answers a different question: what a buyer paid for the middle new house sold in a given month.
Taking inflation out
The BLS reported on August 12, 2026 that the Consumer Price Index for All Urban Consumers rose 3.4% in the 12 months ending July 2026, before seasonal adjustment. July is the matching month for July house prices. The real change is a division, not a subtraction: 1.026 ÷ 1.034 − 1 = −0.77%, or −0.8%. Using index levels gives the same result: house prices 443.52 ÷ 432.4 = 1.0257; CPI-U 333.918 ÷ 323.048 = 1.0336; 1.0257 ÷ 1.0336 − 1 = −0.77%.
The comparison is not sensitive to the choice of month. The August 2026 CPI, released on September 11, 2026, also showed a 12-month rise of 3.4%.
Applying the same formula division by division, the Middle Atlantic (+2.8% real), East North Central (+1.1%) and New England (+0.7%) beat inflation. The other six fell in real terms, from −0.5% in West North Central to −2.7% in the Mountain division.
The CPI's shelter index rose 3.2% over the 12 months to July 2026, and owners' equivalent rent also rose 3.2%, according to the same BLS release. Owners' equivalent rent estimates what owners would pay to rent their own homes; it is a cost of housing services, not the price of the asset. How the CPI is built explains the distinction. In the year to July 2026, the rental-equivalent cost of owning rose faster than the conforming-mortgage house price index.
Mortgage rates since July
The July index describes July transactions, which predate the September mortgage-rate readings. Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed average at 6.95% in the week of September 17, 2026, 7.03% in the week of September 24, and 7.28% on October 1, 2026. A year earlier, the October 1 release said, the rate was 6.34%.
On a 30-year fixed loan, monthly principal and interest per $100,000 is $661.95 at 6.95% and $684.21 at 7.28%, a difference of $22.26. The formula is L × i ÷ (1 − (1 + i)^−360), with i the annual rate divided by 12. The full payment on a median new home is worked through in the affordability piece and is not repeated here.
Because of the two-month data lag, the report due on October 27, 2026 covers August, which also predates the September and October 1 rate readings quoted here. Any link between those rates and prices cannot be seen in the July or August index.
What it means for your money
The index is a rough guide to an asset's value, not a valuation of any one house. The mechanism that matters most is leverage: a mortgage is fixed in dollars, so price changes land entirely on the owner's equity.
Illustrative inputs: a house worth $400,000 in July 2025 with a $320,000 mortgage balance, so $80,000 of equity. A 2.6% rise takes the house to $410,400 and equity to $90,400, a 13.0% nominal gain. Deflated by the 3.4% CPI rise, equity is $87,427 in July 2025 dollars, a real gain of 9.3%. The house itself is worth $396,905 in those dollars, and the $320,000 debt is worth $309,478. This ignores principal repaid, interest paid, property tax, insurance, maintenance and the cost of selling.
- Inflation erodes the debt as well as the asset. A fixed-rate balance loses real value at the rate of inflation, which is part of why owners with mortgages can gain in real terms even when prices trail the CPI.
- Leverage works in both directions. The same arithmetic turns a price fall of 2.6% into a 13.0% fall in equity on the same illustrative house.
- Region outweighs the national figure. On these numbers, a Middle Atlantic owner and a Mountain owner had nominal gains of 6.3% and 0.6%. The division table is closer to a household's experience than the headline.
- The index covers conforming purchases. An owner of a condominium, or of a house bought with a loan above the conforming limit ($832,750 baseline for one unit in 2026), is reading an index that excludes houses like theirs.
Sources
- FHFA House Price Index news release, monthly data through July 2026 (September 29, 2026)U.S. Federal Housing Finance Agency · Oct 4, 2026 · Primary source
- FHFA House Price Index (HPI) Monthly Report, Data through July 2026, Released on September 29, 2026U.S. Federal Housing Finance Agency · Oct 4, 2026 · Primary source
- FHFA HPI FAQs (last update November 2025)U.S. Federal Housing Finance Agency · Oct 4, 2026 · Primary source
- Revisiting the Differences between the OFHEO and S&P/Case-Shiller House Price Indexes: New Explanations (January 2008)Office of Federal Housing Enterprise Oversight (now FHFA) · Oct 4, 2026 · Primary source
- FHFA Announces Conforming Loan Limit Values for 2026 (November 25, 2025)U.S. Federal Housing Finance Agency · Oct 4, 2026 · Primary source
- U.S. House Prices Rise 2.1 Percent Year over Year; Up 0.3 percent Quarter over Quarter (August 25, 2026)U.S. Federal Housing Finance Agency · Oct 4, 2026 · Primary source
- Consumer Price Index News Release, July 2026 (August 12, 2026)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Consumer Price Index Summary — August 2026U.S. Bureau of Labor Statistics · Sep 11, 2026 · Primary source
- Primary Mortgage Market Survey, week of September 17, 2026Freddie Mac · Sep 17, 2026 · Primary source
- Mortgage Rates Average 7.03% (Primary Mortgage Market Survey, September 24, 2026)Freddie Mac · Sep 28, 2026 · Primary source
- Mortgage Rates Average 7.28% (Primary Mortgage Market Survey, October 1, 2026)Freddie Mac · Oct 4, 2026 · Primary source
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