Annual price growth was driven by strong increases in New York and California markets
High mortgage interest rates continue to challenge the housing market, and homebuyers’ budgets are increasingly stretched when buying a home. Overall, there is more caution in the housing market as housing indicators continue to revert to pre-pandemic trends and buyers evaluate their options.
In July, existing home sales activity ticked up from a month prior thanks to small decreases in mortgage rates in late May and early June. Nevertheless, sales remain low. Although sales struggled, home prices remained relatively constant in most markets despite more inventory of for-sale homes.
June marked the twelfth straight month of annual appreciation (Figure 1). Home prices continued to hit new highs and were up by 5.5% when compared with the June 2022 peak. However, the market has begun to put the brakes on growth.
The CoreLogic S&P Case-Shiller Index slowed to a 5.4% year-over-year gain in June after peaking at 6.5% in both February and March of this year.
The non-seasonally adjusted, month-over-month index continued to show a slowing seasonal increase. The index was up by 0.5%, well below the 0.8% average June increase recorded between 2015 and 2019 (Figure 2) and is a sharp contrast to the 1% monthly increase from June 2023.
The 10-city and 20-city composite indexes also posted their twelfth straight month of annual increases in June, up by 7.4% and 6.5%, respectively. However, the increases seen in both composite indexes also slowed from the March peak. Compared with the 2006 peak, the 10-city composite index is now 56% higher, while the 20-city composite is up by 62%. Adjusted for inflation, which is showing signs of easing, the 10-city index is now 6% higher than its 2006 level, while the 20-city index is up by 10% compared with its 2006 high point. Nationally, home prices are 20% higher (adjusted for inflation) compared with 2006.
In June, 19 out of 20 metros saw slowing price growth year over year compared with the previous month (Figure 3). Detroit was the only metro to post stronger price appreciation than the month before.
New York, San Diego, Las Vegas, and Los Angeles continued to lead the 20-city index, with respective annual gains of 9%, 8.7%, 8.5%, and 8.2%. Twelve metros saw annual price gains higher than the national 5.4% increase. While San Diego was the fastest appreciating market in the early months of 2024, prices have since decelerated.
Cleveland and Charlotte, North Carolina led the group, posting the largest drops in price growth in June. Portland, Oregon and Denver were the slowest appreciating markets in the 20-city index.
While home prices increased by 0.5% nationally from May to June, 13 metros recorded weaker monthly gains. Portland, Oregon and San Francisco led the index for weakest monthly price gains. Figure 4 summarizes the current year’s monthly changes in June compared with averages recorded between 2015 and 2019. Detroit and Cleveland posted the nation’s largest monthly gains, rising 1.1% and 1%, respectively.
The month-over-month comparison of appreciation by price tier and location also reveals relative changes in demand across the country. In June, most metros and price tiers saw home prices increases; however, middle tier prices fell for San Diego and San Francisco. New York led with the strongest appreciation in low and middle tiers, which were notably stronger than the same tiers in other metros.
High-tier home prices were, on average, up at the fastest pace, by 0.7%, while the middle and low tiers were up 0.5% (Figure 5).
All eyes are on the Federal Reserve and the anticipated rate cut in September, and likely homebuyers may wait until mortgage rates drop further before buying. Renewed homebuying demand should also give a boost to home prices.
Again, there will continue to be diverging trends across U.S. geographies. Markets with slower inventory boosts of existing and newly built homes will trend differently than markets where home prices continue to be challenged by other non-mortgage costs, such as taxes, insurance, and maintenance.
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CoreLogic’s Office of the Chief Economist
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