U.S. home prices increased 0.4% in May compared with April but were up only 2.1% compared with May 2024, according to First American’s latest home price index report.
That’s the slowest annual home price growth since 2012, the firm says.
“After decelerating for 16 straight months, national house prices stabilized in May at 2.1 percent,” says Mark Fleming, chief economist at First American, in a statement. “Rising mortgage rates in April and May reduced affordability, tempering demand while the supply of homes for sale increased, dragging annual appreciation to the slowest pace since 2012. Slower national price appreciation helps household incomes offset some of the impact of still-elevated mortgage rates on affordability, which is good news for potential buyers.”
However, home price appreciation continues to be strong in certain markets.
“While national house price growth is at a 13-year low, price appreciation exceeded the national pace in 11 of the 30 markets we track,” Fleming says. “The fastest appreciating markets were in the Northeast and Midwest — most notably Cambridge, Mass., Pittsburgh, Cincinnati, St. Louis, and New York.”
“While house prices declined or were flat in many Southern and Western markets, the declines were small relative to equity gained in the pandemic boom,” he adds. “For example, house prices in Tampa, Fla., fell by 4 percent annually, but Tampa was one of the hottest pandemic-era growth markets, with prices increasing 70 percent from pre-pandemic to peak, so most Tampa homeowners have lost little equity compared to what was gained.”
Photo: Gustavo Zambelli