Anticipated Rate Cuts May Not be Enough to Rekindle Cooling Home Price Growth  

Although this is the 149^th consecutive month that the U.S. has seen year-over-year home price gains, the pace of growth is continuing to cool. Price growth increased nationally by 4.7% in June when compared with a year prior, and only one state posted double-digit gains this month. Next summer, prices are projected to slow further, only growing by 2.3% on a year-over-year basis.  

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 homebuying season as high mortgage rates continued to compress affordability and dissuade potential homebuyers. 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.”  

Dr. Selma Hepp 

– Chief Economist for CoreLogic