U.S. home prices decreased 0.1% in June compared with May but were up 1.7% compared with June 2024, according to First American’s latest House Price Index report.
That’s the slowest rate of annual home price appreciation since March 2012.
In addition, First American reports that it has revised down the home price growth figures reported in last month’s HPI by 0.2 percentage points, from +0.4% to +0.2%.
Mark Fleming, chief economist for First American, says although home prices nationally slowed further, we are possibly nearing a “Goldilocks” point that could help bring more balance to the housing market.
“The great house price slowdown continues with seven consecutive months of annual price deceleration,” Fleming says in the report. “As inventory builds in certain parts of the country, price cuts serve as a way to entice buyers. Meanwhile, demand still grapples with the weight of affordability constraints. These trends have led to a national house price slowdown—a clear signal that the market is shifting back toward buyers after being so firmly in sellers’ favor during the pandemic years.”
“Yet, it’s important to remember that many potential sellers—especially those who purchased their homes during the pandemic or earlier—continue to benefit from positive, albeit slower, price appreciation,” Fleming says. “Price growth that’s not too hot and not too cold may be just the ‘Goldilocks’ scenario needed to restore balance to the housing market.”
Where home price relief is needed the most is in the starter tier – which in June saw declining prices in 14 of 30 markets.
“The national affordability crunch hits potential first-time home buyers the hardest since they can’t bring cash from an existing home sale to the closing table,” Fleming says. “These first-time buyers typically target the starter home price tier, and in June, prices at this level declined in 14 of the top 30 markets we track. The largest annual declines were in traditionally more expensive markets such as Denver, as well as in relatively more affordable markets like Orlando, Fla. It’s likely that lower prices in these areas will provide buyers a much-needed opportunity to enter the market.”
Photo: David Nieto