House Prices Up 0.4% in October—but Momentum Cools to 1.7% YoY and September Slips -0.1%

The FHFA’s official release on 2025-12-30 trumpets a +0.4% monthly rise in October. The fine print? September was revised down to -0.1%, and annual growth cooled to +1.7% from +2.3% in August. It’s an upbeat headline with a soft underbelly.

Here’s what the data reveals:
- October posted +0.4% MoM, but September was revised to -0.1%, tempering the near-term narrative.
- Year-over-year growth slowed to +1.7% (Oct 2025 vs Oct 2024), down from +2.3% reported for August.
- Regional dispersion undermines the “broad strength” story: West South Central rose +1.0% MoM in October but is -0.7% YoY; East South Central fell -0.4% MoM.
- Revision dynamics flipped: July was revised up in the prior release; September is now revised down—adding a layer of caution to the trend.

Monthly Trends

Regional Dispersion Comparison

Historical Comparison & Narrative Drift

## The Rebound With an Asterisk

October’s +0.4% rise looks clean until you pair it with September’s -0.1% revision. Over August to October, the cumulative move is roughly +0.7%, or about ~2.8% annualized—a far cry from a reacceleration narrative. That’s consistent with the +1.7% YoY pace, which is down from +2.3% in August and indicative of cooling since late summer.

The release emphasizes the monthly uptick without contextualizing the slowdown in the annual rate. That omission matters: when short-run gains coincide with slower YoY growth and a negative revision to the prior month, the underlying impulse is more “late-cycle moderation” than “second wind.”

In short, the headline bounce is real; the momentum behind it is not impressive.

Regional Strength—or Regional Spin?

The FHFA highlights a monthly range from -0.4% (East South Central) to +1.0% (West South Central) in October. That sounds broad until you check the 12-month lens:

• West South Central: +1.0% MoM in October, but -0.7% YoY—a monthly pop papering over annual weakness.

• Middle Atlantic: Still the standout at +5.3% YoY, down from +6.3% in August—strength, but cooling.

• Dispersion narrowed month-to-month (from -0.8% to +1.2% in August to -0.4% to +1.0% in October), which reads more like “less volatility” than “healthier breadth.”

The message: some regions can still print strong monthly gains, but the annual map shows fissures. When one of the top monthly performers is negative year-over-year, breadth is not your friend.

Revisions Are Talking—Listen

Revisions flipped direction. The October 28 release revised July upward (from -0.1% to 0.0%), while the December 30 release revised September downward (from 0.0% to -0.1%). That shift can reflect either measurement noise at a turning point or genuine softening that early estimates missed. In either case, it weakens the near-term trend.

Pair that with the YoY slowdown to +1.7%, and the narrative is clear: the market is cooling at the margin. The risk isn’t a collapse—it’s a grind. In a rate-sensitive sector, that matters for earnings trajectories, construction pipeline pacing, and the willingness of buyers to chase price in 2026.

The MoM/YoY Contradiction
- A +0.4% MoM rise can co-exist with a weaker YoY pace if prior months were softer. That’s precisely what September’s -0.1% revision implies.
- The three-month profile—+0.4%, -0.1%, +0.4%—does not suggest sustained acceleration.

Regional Breadth Check
- Monthly strength clustered at the extremes, while the 12-month range softened at both ends (top fell from +6.3% to +5.3%, bottom slipped from -0.6% to -0.7%).
- Narrower dispersion is not inherently bullish; it often shows markets settling into a slower, more uniform pace.

What the Release Didn’t Say
- It did not surface the YoY deceleration versus August (+2.3% to +1.7%).
- It did not connect the West South Central’s +1.0% MoM with its -0.7% YoY, a sign of underlying weakness despite the monthly uptick.

What This Means for Markets

• Homebuilders: A stable-but-cooling HPI suits builders focused on entry and move-up segments with incentives rather than price-led margin expansion. Expect pricing discipline and mix management over headline ASP growth. Tilt toward operators with faster inventory turns and lower land intensity.

• Single-Family Rental REITs: Slowing price appreciation is neutral-to-positive for acquisition math if rents hold. Look for platforms with pipeline visibility in regions that remain positive YoY (e.g., Middle Atlantic strength) and avoid overweights in negative YoY pockets like West South Central until the trend stabilizes.

• Mortgage Credit and MBS: A cooler HPI softens prepayment risk and supports carry, while guarding against late-cycle home equity extraction. Favor up-in-quality credit and servicing-heavy models that benefit from steady duration rather than rapid churn.

• Building Products and Housing Beta: With ~2.8% annualized price momentum over the last three months, the setup favors volume over price. Suppliers with exposure to repair-and-remodel may fare better than those relying on new-home ASP inflation.

• Regional Allocation: Don’t chase one-month winners. Favor regions with consistent positive YoY prints and temper exposure where the YoY line is negative despite monthly bounces.

What to watch:
- Next FHFA report: does October’s +0.4% hold after revision, or does it echo September’s downward adjustment?
- The YoY trendline: does it stabilize near ~1.5–2.0%, or continue to drift lower into early 2026?
- Regional breadth: do negative YoY pockets shrink, or do they spread beyond West South Central?

The Investor Takeaway

Treat October’s +0.4% as a tactical bounce inside a cooling trend. The -0.1% September revision and a slower +1.7% YoY pace are telling you the same story: price appreciation is moderating, breadth is uneven, and revisions are no longer a tailwind. For positioning, prioritize operators built for volume, incentives, and cost control over those counting on price-led earnings. Avoid chasing regional one-offs; buy durable trends.

In this tape, the alpha isn’t in the headline—it’s in the footnotes.