Limited inventory and high mortgage rates continue to push home prices higher, but growth is starting to slow.
This is according to the monthly House Price Index report core logic, Data show that U.S. home prices increased by 4.9% year-on-year in May. This is the lowest annual appreciation rate since October 2023.
The index rose 0.6 percentage points from April. CoreLogic predicts that house prices will grow by 3% by May 2025.
Selma Hepp, chief economist at CoreLogic, said: “While national annual home price growth continues to slow as expected, more markets have observed home price appreciation over the past few months as soaring mortgage rates this spring slowed homebuyer demand and prices. Slow down.
Geographically, home prices have risen the most in the Northeast, as inventory is well below pre-pandemic levels. New Hampshire had the highest annualized growth rate at 12%, while New Jersey and Rhode Island each had growth rates of 9.8%. At the bottom of the list, with increases of 0.9%, were Louisiana and Texas, where inventories are rising.
At the metro level, Miami and San Diego remain hot, outpacing the other top 10 metro areas in the report. Home prices in San Diego increased by 9.2% annually, and in Miami by 8.5%. Houston’s growth rate was the lowest among these cities at 2.1%, followed by Denver’s 2.4%. Other cities saw increases of at least 5%.
Another trend covered in the report is the continued widening gap in home price growth between attached homes and detached homes. During the year, detached house prices increased by 5.4%, while detached house prices increased by 2.8%.
CoreLogic said this could be due to the growing popularity of detached homes due to the work-from-home boom that has accompanied the COVID-19 pandemic.
