U.S. single-family home prices experienced a slight decline in June, marking the smallest annual increase in nearly a year as elevated mortgage rates deterred potential buyers and increased housing supply. According to the Federal Housing Finance Agency (FHFA), house prices dipped by 0.1% on a month-to-month basis after remaining unchanged in May. The annual increase in house prices was 5.1% through June, the smallest year-on-year rise since July 2023, down from an upwardly revised 5.9% in May.
The second quarter also saw modest growth, with prices up 0.9% compared to the January-March quarter. However, the overall pace of appreciation has slowed, reflecting the third consecutive quarterly deceleration. Anju Vajja, deputy director for FHFA's division of research and statistics, noted that the slower pace of growth is likely due to the combination of higher inventory levels and elevated mortgage rates, which have kept buyers on the sidelines.
Market Overview:- U.S. single-family home prices declined slightly in June, marking the smallest annual increase in nearly a year.
- House prices dipped by 0.1% on a month-to-month basis, with a 5.1% annual increase through June.
- All nine census regions recorded annual house price gains, with the West South Central region trailing with a 2.7% increase.
- The second quarter saw modest growth, with prices up 0.9% compared to the January-March quarter.
- The overall pace of appreciation has slowed due to higher inventory levels and elevated mortgage rates.
- The anticipated start of the Federal Reserve’s interest rate cutting cycle could help bolster demand by lowering mortgage rates.
- House price inflation is expected to continue moderating as the supply of new homes surges to levels not seen since early 2008.
- A significant decline in house prices seems unlikely unless there is a substantial deterioration in the labor market.
- Regional variations in house price gains will persist, with some areas experiencing more significant slowdowns than others.
Looking ahead, house price inflation is expected to continue moderating as the supply of new homes has surged to levels not seen since early 2008, and the inventory of existing homes has risen to the highest point in nearly four years. Despite the cooling market, a significant decline in house prices seems unlikely unless there is a substantial deterioration in the labor market. The anticipated start of the Federal Reserve’s interest rate cutting cycle next month could help bolster demand by lowering mortgage rates, potentially absorbing some of the excess housing inventory.
Geographically, all nine U.S. census regions recorded annual house price gains in June, with notable increases in the Middle Atlantic, East North Central, New England, and East South Central regions. In contrast, the West South Central region saw the smallest increase, with house prices rising by just 2.7%.
