A recent release of housing price data shows that the real estate market in the United States is cooling down, with the national housing prices in June achieving the lowest annual growth rate in two years.
According to the latest Housing Price Index report released by the mortgage technology company ICE, housing prices in the U.S. rose by 0.3% month-on-month in June compared to May. However, the year-on-year increase was only 1.3% compared to June 2024, lower than the 1.6% year-on-year increase in May, marking the slowest growth rate in two years.
ICE indicated that the market is at a crucial turning point regarding housing prices. Currently, nearly one-third of the top 100 real estate markets in the U.S. have seen annual declines of at least 1 percentage point from recent price peaks, with trends suggesting more markets will follow suit.
The company stated that 27 out of the top 100 real estate markets in the U.S. experienced annual price declines in June, a level of softness not seen since the Federal Reserve’s first rate hike in 2022.
Nationally, single-family home prices increased by 1.6%, while apartment prices decreased by 1.4%.
Several factors are converging to contribute to the cooling of the U.S. real estate market, including high housing prices, rising mortgage rates, increased supply, and decreased demand.
The primary factor driving the slowdown in housing price growth is mortgage rates, which are currently holding above 6%.
The inventory of homes for sale in many markets has been steadily increasing, particularly in the Southern and Western regions, easing pressure on rising prices. Over the past year, the inventory of homes for sale has steadily risen, with June’s inventory up 29% compared to the same period last year.
Andy Walden, Director of Mortgage and Real Estate Market Research at ICE, stated: “The current real estate market is experiencing two competing forces. The rise in inventory levels is helping to make homes more affordable, but with more markets seeing price declines and homes taking longer to sell, this may lead to homeowners being unwilling to list their properties for sale.”