US Housing Market Cools: Prices Fall Month-over-Month in June
In June, there was a decline in U.S. single-family home prices, resulting in the smallest annual increase in almost a year. This was mainly due to higher mortgage rates, which discouraged buyers and increased the availability of housing.
According to the Federal Housing Finance Agency, there was a slight decrease of 0.1% in house prices on a month-on-month basis, following a period of stability in May. The 12-month increase in June was 5.1%, which is the smallest rise since July 2023. This comes after a 5.9% increase in May, which was revised upward. According to previous reports, the annual increase in house prices was 5.7% in May.
Prices experienced a 0.9% increase in the second quarter when compared to the January-March quarter. The figures rose by 5.7% from the second quarter of 2023 to the April-June quarter of this year.
“U.S. house prices experienced a decline in quarterly growth for the third consecutive time,” stated Anju Vajja, deputy director for FHFA’s division of research and statistics. “The decrease in the rate of appreciation by the end of June can be attributed to the increased number of homes available for sale and the higher mortgage rates.”
House price inflation is expected to decrease in the coming months due to a significant increase in new housing supply, reaching levels not seen since early 2008. The inventory of existing homes has also increased to its highest level in almost four years.
Without a substantial deterioration in the labor market, it is improbable that there will be a direct decrease in house prices. With the Federal Reserve anticipated to initiate its interest rate cutting cycle in the coming month, the prospect of lower mortgages is likely to stimulate demand and help alleviate the surplus inventory.
Annual house price gains were recorded in all nine census regions in June, with significant increases observed in the Middle Atlantic, East North Central, New England, and East South areas. The West South Central region saw a modest 2.7% increase in prices.
