Home prices increased 0.3% nationally in July compared with June and were up 5.3% compared with July 2023, according to First American’s home price index.
Home prices are now 55% higher compared to pre-pandemic levels (February 2020), First American says.
However, the rate of appreciation has been slowing since about the start of this year.
“July marked the seventh consecutive month of slowing annualized house price appreciation,” says Mark Fleming, chief economist for First American, in a statement. “Elevated mortgage rates have driven affordability to near-record lows, leaving many buyers on the sidelines and keeping sellers rate locked-in.
“The combination of the severely unaffordable market conditions and the rate lock-in effect has largely frozen home buying and selling, contributing to the cooling but still positive pace of appreciation,” Fleming says. “However, the prospect of Federal Reserve interest rate cuts this fall has already sent mortgage rates lower in August, which may spur some buyers and sellers to act and begin to defrost market transaction volume.”
Prices continued to fall in certain markets – for example, Austin and Tampa have seen significant price drops in recent months.
“While the national house price trend is interesting, real estate is inherently local and prices are not appreciating in all markets,” Fleming says. “Annual price growth remains strong in top markets where demand continues to outpace supply or where relative affordability is a draw, such as Anaheim, Calif., and Pittsburgh.
“In markets that offer relative affordability, homes remain more accessible compared to other major markets, making them attractive to buyers who are priced out of higher-cost regions, despite rising prices,” he adds. “In contrast, house prices in other markets are decelerating notably, with prices declining in cities like Austin, Texas, and Tampa, Fla.”
Photo: Gustavo Zambelli