U.S. home prices barely budged in February, rising 0.5% compared with March and rising only 1.8% compared with February 2024, according to First American’s home price index.
It was the slowest pace for home price growth in more than 13 years, the firm says.
In fact, homer price appreciation is now so slow, it’s now pacing behind household income growth.
“National house price growth slipped below 2 percent for the first time since 2012, amid strained affordability and heightened economic uncertainty,” says Mark Fleming, chief economist for First American, in the report. “Wary potential home buyers are adopting a ‘wait-and-see’ approach, curbing demand while inventory continues to drift higher.”
“One silver lining – household income growth is now outpacing house price appreciation, allowing potential buyers’ incomes to narrow some of the affordability gap, if mortgage rates hold steady,” he adds.
Home price appreciation is slowing the most where inventory is rising.
“House prices declined year over year in nine of the top 30 markets we track, with all nine located in the South or West,” Fleming says. “Notably, markets with some of the steepest increases in annual inventory levels, such as Denver and Orlando, Fla., have the deepest price declines. Conversely, house price appreciation remains strong in the Northeast and Midwest, where inventory has lagged behind.”
First American’s HPI report tracks home price changes less than four weeks behind real time at the national, state and metropolitan (core-based statistical area) levels and includes metropolitan price tiers that segment sale transactions into starter, mid and luxury tiers.
Photo: Alexander Grey