U.S. home prices increased 0.4% in April compared with March but were up only 2% compared with April 2024 – a clear indication that home price appreciation is slowing – according to First American’s home price index report.
“House prices nationally reached another record high in April, but the annual growth rate has slowed to its lowest level since 2012, underscoring the ongoing rebalancing in the market,” says Mark Fleming, chief economist at First American, in the report. “Persistently high mortgage rates have tempered demand, while increased inventory has boosted supply, dragging house price appreciation down. This normalization follows the unsustainable price growth seen during the pandemic.”
“Although affordability remains a challenge, slower price appreciation is encouraging for potential home buyers as it lets their income-growth driven house purchasing power increase,” Fleming adds.
The Northeast and Midwest regions continued to see stronger price growth in starter tier.
“The markets with the strongest growth in the starter home price tier are predominantly located in the Northeast or Midwest,” Fleming says. “These markets include Pittsburgh, Baltimore, and St. Louis, markets that are attractive to potential first-time home buyers due to their relative affordability. However, homebuilding has also lagged in these markets, leading to high demand relative to limited supply, fueling strong house price appreciation.”
Nationally, home prices are now 57.2% higher compared to pre-pandemic levels (February 2020).
First American notes that the home price growth reported in last month’s HPI report for was revised up by 0.2 percentage points, from +0.5% to +0.7%.
Photo: Scott Webb