Annual home price growth continued to trend downward in July, ebbing to 4.3% in July to stay below 5% for the third straight month, according to the latest Home Price Index (HPI) report from CoreLogic.
July did mark a 150th consecutive month of yearly price growth, but the month’s year-over-year home price gain fell from June’s 4.7% annual uptick, continuing a downward slide as affordability issues have derailed purchase activity. Prices are starting to slip on month-over-month basis as well, down 0.01% in July compared to June.
No states posted a yearly price drop, but price growth continues to see signs of slippage in many areas, especially in the Sun Belt. Rhode Island saw the largest yearly price pickup at 10.6%, followed by New Jersey at 9.7% and Connecticut at 8.3%.
“Housing demand continued to buckle under the pressure of high mortgage rates and unaffordable home prices, leading to a considerable slowing of home price gains during the summer,” said Selma Hepp, chief economist for CoreLogic. “July’s prices were essentially flat from the month before, which was notably cooler than the average gain of 0.4% recorded between June and July in years prior to the pandemic and especially during the pandemic.”
CoreLogic’s HPI forecast reflects the recent price weakness, with the analytics company expecting just a 0.2% month-to-month increase from July to August and a 2.2% annual bump by July of next year. Hepp, like many in the mortgage industry, is looking to the September anchor rate cut from the Federal Reserve as a potential inflection point.
“The question for home prices going forward is whether the upcoming rate cut from the Fed and expected continuation of falling mortgage rates will be sufficient to motivate potential homebuyers who may start to fear cooling labor market and continued uncertainty of a soft landing, along with anticipation around the presidential election,” Hepp said. “And while lower mortgage rates are a boost to affordability and are likely to help buyer demand, the usual fall housing market slowdown is upon us and is likely to contain any significant surge in activity.”
