Limited inventory and high mortgage rates continue to push home prices higher, but the pace of growth is starting to slow down.
That’s according to the monthly home price index report from CoreLogic, which shows that U.S. home prices grew by 4.9% year over year in May. That was the lowest yearly rate of appreciation since October 2023.
The index was up 0.6% percentage points compared to April. CoreLogic forecasts that home prices will grow by 3% by May 2025.
“While national annual home price growth continues to slow as anticipated, cooling appreciation over the past months is now observed in more markets, as the surge in mortgage rates this spring caused both slowing homebuyer demand and prices,” Selma Hepp, chief economist for CoreLogic, said in a statement.
Geographically, home prices are rising the most in the Northeast as a result of inventory that’s considerably lower than pre-pandemic levels. New Hampshire posted the highest annualized growth among states at 12%, while New Jersey and Rhode Island each saw growth of 9.8%. Bringing up the rear at 0.9% were Louisiana and Texas, states where inventory is rising.
At the metro level, Miami and San Diego remain hot, outpacing the rest of the top-10 metros in the report. Prices in San Diego grew by 9.2% year over year while Miami tallied an 8.5% rise. Houston posted the lowest growth of these metros at 2.1%, with Denver at 2.4%. The other metros posted gains of at least 5%.
Another trend covered in the report is that the gap between home-price growth for attached homes and detached homes continues to rise. Prices for detached homes rose by 5.4% during the year while those of attached homes grew by 2.8%.
CoreLogic said this is likely due to the increased popularity of detached homes as a result of the work-from-home boom that accompanied the COVID-19 pandemic.
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