Home price growth continues to cool off, according to the CoreLogic Home Price Index (HPI), sliding to 4.7% year over year in June to mark the second straight month with an annual gain under 5%.
Yearly price growth had trended above that threshold for six consecutive months before dipping to 4.9% in May, and CoreLogic expects “what will likely be a continual slide” throughout the next 12 months. June kept up a 149-month streak — more than 12 years — of home price growth, but CoreLogic projects a drastic slowing in price increases to a rate of just 2.3% year over year by June next year.
Month-over-month gains were likewise muted and foreshadow price softening, said Selma Hepp, CoreLogic’s chief economist.
“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,” she 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%.”
Hepp also noted that cooling prices grew more widespread geographically. Nine states saw a monthly downshift in home prices in June, up from just three in May. And while no states saw an annual price loss in June, just one (South Dakota at 10%) logged double-digit growth. Four Northeastern states rounded out the top five: New Jersey (9.3%), Rhode Island (9.2%), Connecticut (8.5%) and New Hampshire (8.2%).
Among the 10 major metros tracked by CoreLogic, warm Sun Belt cities continued to pace yearly price growth. Miami saw the highest year-over-year gain at 10%, followed by San Diego and Las Vegas, both at 7.5%.
CoreLogic pointed to interest rates — which still hovered near (but not above) 7% over the course of June, per Freddie Mac — as the chief driver of declining appreciation.
“The April surge in mortgage rates notably weighed on consumer sentiment,” Hepp said, “and consumers increasingly chose to respond to the anticipation of a lower mortgage rate environment later this year.”
