U.S. home prices posted a 4.7% year-over-year gain in June, down 20 basis points from May growth, according to the latest CoreLogic Home Price Index (HPI). Although June marked the 149th consecutive month of annual growth, CoreLogic projects the rate of growth will decrease by more than half of its current rate over the next 12 months. The group projects prices will grow by only 2.3% on a year-over-year basis next summer.
On a month-over-month basis, home prices rose just 0.3% from May to June. CoreLogic says the cooling of monthly gains during the spring home buying season—which carried into the summer—reflects the impact of high mortgage rates on budgets and overall affordability challenges.
“Housing market activity essentially froze at the end of the spring home buying season as high mortgage rates continued to compress affordability and dissuade potential home buyers,” Selma Hepp, chief economist for CoreLogic, said. “The 0.3% gain in prices from the month before was less than half the increase between May and June prior to the pandemic, when gains averaged 0.8%.”
South Dakota (+10%) was the lone state to post double-digit annual home price gains in June. Other states with the highest annual price increases include New Jersey (+9.3%), Rhode Island (+9.2%), Connecticut (+8.5%), and New Hampshire (+8.2%). No states posted annual home price declines in the month, but nine states reported monthly price declines.
“In addition, cooling home prices continued to spread across more markets, and nine states reported a monthly decline, up from three states last month,” said Hepp. “The April surge in mortgage rates notably weighed on consumer sentiment, and consumers increasingly chose to respond to the anticipation of a lower mortgage rate environment later this year.”
