Should my federal and state refund amount be decreasing as I enter home office business expenses? I also received income on a 1099-NEC as well, if that matters.

It depends. Once you enter all your other business expenses and enter your home office expense, once your net profit goes to zero, your full home office expense will cease at that point and the excess will  be a carryover into the following year.

For an example, if you have $1000 worth of income from your business and you have already reported $900 in expenses. Now you if you are trying to claim a $1000 home office expense, $100 will be applied this year because your net profit is zero. This means $900 will be carried over into the tax season.

Also, if you are already at a net loss when you report the home office expense, then the entire home office expense will be a carryover into next year.