U.S. home prices increased 0.4% in February compared with January and were up only 2.0% compared with February 2024, according to First American’s home price index report.
“National house price growth slipped to its slowest pace since March 2012, amid ongoing affordability constraints and rising inventory,” says Mark Fleming, chief economist at First American, in the report. “While mortgage rates retreated in February, the softening home price growth reflects sales that went under contract earlier, including when demand softened amid mortgage rates that surpassed 7 percent.”
“The good news is that slowing price growth is creating more favorable conditions for buyers in some markets, offering more potential opportunities for those looking – just in time for the spring home-buying season,” Fleming says. “However, given the recent decline in rates and the seasonality of demand, it’s possible that price growth may accelerate in the coming months, particularly in markets where demand outstrips supply.”
Regionally, states in the Sunbelt region saw the slowest annual home price appreciation in February. Slower home price growth in these areas means they will likely become more “buyer-friendly” in the months to come.
“Significant home building in many of those markets has increased inventory, easing price pressure,” Fleming says. “Markets where home prices are slowing, making for a more buyer-friendly conditions include Tampa, Fla. and Phoenix. In contrast, the Northeast has seen far less new construction, and where inventories remain tight, price growth follows.”
Nationally, home prices are now 54.8% higher compared to pre-pandemic levels (February 2020).
First American notes that home price growth reported in last month’s HPI for December 2024 to January 2025 was revised down by 0.16 percentage points, from +0.12% to -0.04%.
Photo: David Nieto