The nation’s housing market is experiencing a notable cooling effect, driven by inflated home prices, elevated mortgage rates, increasing supply, and dwindling demand.
According to ICE, a mortgage technology firm, annual home price growth for June stood at just 1.3%, a decrease from 1.6% in May and marking the slowest increase in two years.
Approximately one third of the 100 largest housing markets are now reporting annual price declines of at least one full percentage point from their recent peaks, indicating a broader trend that could affect more markets. While prices for single-family homes rose by 1.6%, condominium prices saw a decrease of 1.4% on a national scale.
The inventory of available homes has been steadily climbing over the past year, recording a 29% increase in June compared to the same month last year. However, the pace of growth began to taper off this past spring. Meanwhile, the average rate for a 30-year fixed mortgage has consistently remained in the high 6% range throughout most of this year, a rate that is double what it was during the early pandemic days when home prices began to surge.
“Two opposing factors are influencing the housing market at the moment,” stated Andy Walden, head of mortgage and housing market research at ICE. “While rising inventory levels are contributing to more affordable homes, declining prices in a growing number of markets and extended listing times may lead homeowners to hesitate in putting their homes on the market.”
Regionally, home prices are still experiencing significant increases in the Northeast and Midwest, but are softening in the South and West. Cape Coral, Florida, recorded the largest decline, with prices dropping just over 9%. Price reductions are also noted in Austin and Tampa, along with seven of the ten major markets in California.
