Home prices across the U.S. are struggling to keep up with inflation, meaning many homeowners are seeing their real estate investments lose value. For most Americans, a home represents their largest financial asset—but that asset is now delivering weaker returns than inflation itself.

According to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, home prices in August rose just 1.5% compared to the same month last year, a slight dip from July’s 1.6% annual gain. While prices haven’t turned negative, they’re climbing at a pace well below the current 3% inflation rate. This marks the fourth consecutive month that housing wealth has eroded in real terms.

Nearly all major metropolitan markets saw home prices fall from July to August, with Chicago being the only city to register a gain. Although housing prices typically dip seasonally during late summer, analysts noted that this year’s decline was more pronounced than usual, signaling broader market weakness driven by persistently high mortgage rates.

Mortgage rates hovered around 7% through most of the summer, according to Mortgage News Daily, before edging down to 6.5% by the end of August and 6.19% currently. “Mortgage rates remaining above 6.5% continue to weigh on buyer demand,” said Nicholas Godec of S&P Dow Jones Indices. “The combination of high financing costs and near-record prices has limited transaction activity.”

Regional differences in home prices remain stark. The New York metro area saw the strongest annual growth at 6.1%, followed by Chicago at 5.9% and Cleveland at 4.7%. By contrast, Tampa’s prices fell 3.3%, while Phoenix and Miami each declined by 1.7%. Western cities such as San Francisco, Denver, and San Diego also experienced drops.

“Markets that saw the biggest pandemic-era booms are now experiencing the sharpest corrections,” Godec added. “While this could lead to a more sustainable market long term, homeowners are currently watching their equity shrink as buyers face high prices and borrowing costs.”

A separate Federal Housing Finance Agency (FHFA) report showed slightly better results, with home prices rising 2.3% year over year in August and 0.4% from July. “We may see some stability return as mortgage rates ease,” said Eugenio Aleman, chief economist at Raymond James, noting that lower borrowing costs could help stabilize housing activity through the remainder of the year.