IRVINE, Calif. – U.S. year-over-year home price gains inched down, reaching 4.7% in June, falling further from the previous month’s 4.9% in what will likely be a continual slide throughout the next year, the real estate research company CoreLogic found.
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, according to the CoreLogic Home Price Index (HPI) and HPI Forecast for June 2024.
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.
While no states posted annual home price declines in June, only one – South Dakota – posted double-digit growth, coming in at 10%. Behind South Dakota, the other states with the highest increases year over year were New Jersey (9.3%), Rhode Island (9.2%), Connecticut (8.5%), and New Hampshire (8.2%).
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%.
The continued decline in the pace of appreciation can be linked to elevated mortgage rates. 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
“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,” said Dr. Selma Hepp, chief economist for CoreLogic. “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. 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.”
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