CoreLogic: Annual Home Price Growth Below 5% for Second Month

(Illustration courtesy of CoreLogic)

U.S. year-over-year home price gains inched down to 4.7% in June, the CoreLogic Home Price Index reported Tuesday.

Although June marked the 149th consecutive month of annual growth, the rate of growth is expected to decrease by more than half of its current rate, with prices expected to grow by only 2.3% on a year-over-year basis next summer, CoreLogic said.

“Housing market activity essentially froze at the end of the spring home-buying season as high mortgage rates continued to compress affordability and dissuade potential homebuyers,” CoreLogic Chief Economist Selma Hepp said. “The 0.3% gain in prices from the month before was less than half the increase seen between May and June prior to the pandemic, when the gains averaged 0.8%. In addition, cooling home prices continued to spread across more markets, and nine states reported a monthly decline, up from three states last month.”

Hepp noted the April surge in mortgage rates notably weighed on consumer sentiment, “and consumers increasingly chose to respond to the anticipation of a lower mortgage rate environment later this year,” she said.

Month over month, home prices rose just 0.3% from May to June. The CoreLogic HPI Forecast indicates that prices will repeat that pattern, rising by 0.3% again from June 2024 to July 2024. In the years prior to pandemic, monthly gains from May to July generally saw stronger increases. The cooling of monthly gains during the spring home-buying season reflects the impact of high mortgage rates on home buyers’ budgets and constraint on affordability.

Home prices in the 10 select large U.S. metros from June 2023 to June 2024 revealed that Miami posted the highest gain at 10% year over year. San Diego and Las Vegas tied for second at 7.5%, with Chicago coming in third at 7.2%, CoreLogic reported.

“The continued decline in the pace of appreciation can be linked to elevated mortgage rates,” the report said. “Although the Federal Reserve Board is anticipated to cut rates in September, high interest rates continue to affect affordability, and several markets in the South continue to see inventory increases that are pulling prices below last year’s numbers.”