US Home Prices Hit Record High in June While Growth Slows

US home prices reached a new peak in June, continuing an upward trend, although the pace of growth has slowed. According to the S&P CoreLogic Case-Shiller National Home Price Index, home prices rose by 0.2% in June compared to May. While this increase is slightly below May’s 0.3% growth, it marks the fifth consecutive month of price rises and sets a new record for the index.

Slower Annual Growth but Prices Remain High

On a year-over-year basis, home prices nationwide increased by 5.4% in June, though this represents a slight slowdown from the 5.9% rise reported in May. This deceleration reflects a more moderate growth rate, even as prices continue to set new highs.

The S&P CoreLogic 20-City Home Price Index, which tracks home prices in the 20 largest cities across the US, showed a 0.4% gain in June, exceeding economists’ expectations. Over the past year, home prices in these major cities have climbed by 6.5%, signaling sustained demand in key urban markets.

Metro Areas Leading Price Gains

Several major metropolitan areas led the country in price gains. New York saw the largest increase, with prices rising 9% over the past year. San Diego followed closely with an 8.7% rise, while Las Vegas recorded an 8.5% increase. These cities have seen heightened demand, contributing to significant price growth.

Affordability Challenges Persist

Despite the price growth, affordability remains a significant issue for many American families. The National Association of Realtors (NAR) reported that its affordability index fell to 93.3 in June, down from 93.5 in May and 93.7 a year ago. The index measures how well a typical family can afford a median-priced home with a 20% down payment. A value below 100 indicates that most families are struggling to afford homes in the current market.

In June, the average mortgage payment climbed to $2,303, a 6.3% increase from the same month last year. Although mortgage rates have recently dropped to their lowest levels since May 2023, many potential homebuyers are holding off in anticipation of further rate cuts.

Potential Relief from Lower Mortgage Rates

As the Federal Reserve considers lowering interest rates, many experts expect mortgage rates to decline further, potentially easing affordability challenges. Last week, mortgage rates fell to their lowest level in over a year, which could encourage more buyers to enter the market.

Economists, including CoreLogic’s Molly Boesel, suggest that potential buyers are waiting for further rate cuts before making purchases. Lower rates could help families manage the high costs of homeownership and lead to an increase in home sales.

Future Housing Market Trends

analysts at Morgan Stanley predict that lower mortgage rates will improve affordability, which could boost home sales and slow the rapid growth in home prices. As more inventory becomes available and rates decrease, the housing market is expected to experience increased activity in the coming months.

For buyers, sellers, and investors, the current trends suggest that while prices remain high, the housing market may stabilize with improved affordability and greater sales volume. However, potential buyers should remain cautious, as economic conditions and policy changes could significantly impact the market's direction in the near future.

Also Read: New Real Estate Rules Bring Added Complexity for US Homebuyers