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August 27, 2024 – 7:08 AM PDT
WASHINGTON (Reuters) – U.S. single-family home prices fell in June, leading to the smallest annual increase in nearly a year, as higher mortgage rates pushed buyers to the sidelines and boosted housing supply.
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House prices dipped 0.1% on a month-on-month basis after being unchanged in May, the Federal Housing Finance Agency said on Tuesday. They increased 5.1% in the 12 months through June, the smallest year-on-year rise since July 2023, after advancing by an upwardly revised 5.9% in May. The rise in annual house prices was previously reported to have been 5.7% in May.
Prices were up 0.9% in the second quarter compared to the January-March quarter. They increased 5.7% between the second quarter of 2023 and the April-June quarter this year.
“U.S. house prices saw the third consecutive slowdown in quarterly growth,” said Anju Vajja, deputy director for FHFA’s division of research and statistics. “The slower pace of appreciation as of June end was likely due to higher inventory of homes for sale and elevated mortgage rates.”
House price inflation is likely to moderate further in the months ahead as new housing supply has surged to levels last seen in early 2008. The existing homes inventory has also risen to the highest level in nearly four years.
An outright decline in house prices is, however, unlikely in the absence of significant labor market deterioration. Lower mortgages, with the Federal Reserve expected to begin its interest rate cutting cycle next month, should boost demand and absorb some of the excess inventory.
All nine census regions recorded annual house price gains in June, with big increases in the Middle Atlantic, East North Central, New England and East South areas. Prices in the West South Central region trailed with a 2.7% increase.
Reporting by Lucia Mutikani; Editing by Paul Simao
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