Key Takeaways
- Home prices rose 5.4% over the year in June, down from a 5.9% annual increase in May, according to fresh data.
- Home price increases could further slow as the year goes on because more homes are coming on the market.
- The “lock in effect” that prevented homeowners from selling has eased as mortgage rates have fallen from recent highs.
Home prices are still soaring, but they aren’t shooting up quite as fast as they did earlier this year.
Nationwide home prices hit a record high in June, according to the S&P CoreLogic Case-Shiller Home Price Index released Tuesday. Prices were up 5.4% over the year, down from a 5.9% annual increase in May.
The data corroborated the trend seen in recent data from the National Association of Realtors. Mortgage rates are falling from recent peaks as inflation cools and the Federal Reserve prepares to cut its benchmark interest rate. Prices were rising by some 20% in parts of 2021 and 2022.
Lower mortgage rates have encouraged more homeowners to put houses on the market as the “lock-in” effect loosens its grip. With more choices available to buyers, that’s removed some of the upward pressure on prices.
Prices Should Continue to Slow This Year, Economists Say
Price increases could slow down further as the year goes on, Danielle Hale, chief economist at Realtor.com, said in a commentary.
“In the face of sluggish demand, today’s low but quickly improving for-sale inventory has ushered in more market balance than would otherwise be expected, pushing up the share of sellers making price cuts, according to Realtor.com data,” she said. “This should help home prices maintain a slower pace of growth.”
Slower Price Increases Could Aid Housing Market
Affordability has been slammed by prices that have soared since the pandemic hit, high mortgage rates as a result of the Fed’s efforts to combat inflation and a long-simmering housing shortage.
Slower price increases and better affordability would be a breath of fresh air in a housing market stifled by high prices and mortgage rates. Sales have slowed to a crawl in a market that’s unaffordable for most buyers unless they have high incomes or are homeowners already.