First American Data & Analytics’ August 2024 Home Price Index (HPI) report showed house prices nationally sat 54.5 percent higher compared with pre-pandemic levels seen in February 2020.
House price growth reported in the HPI for June to July 2024 was revised down 0.2 percentage points, from 0.3 percent to 0.1 percent.
“Annual house price appreciation nationally slowed for the eighth consecutive month, inching closer to the pre-pandemic historical average of approximately 3.5 percent,” First American Chief Economist Mark Fleming said in a release. “Housing demand remains strained under the pressure of elevated mortgage rates and high prices, while for-sale inventory has increased compared to last year. Sluggish demand combined with increasing supply is a recipe for cooling home price appreciation.
“The key question moving forward is whether the recent, and potentially ongoing, downward trend in mortgage rates fueled by the Fed’s interest rate cut will be enough to bring buyers off the sidelines. But most buyers are also sellers, and they will remain significantly rate locked-in by their current low-rate mortgages, so modestly lower rates may not spur significant numbers of buyers into the market.”
The First American Data & Analytics HPI segments home price changes at the metropolitan level into three price tiers based on local market sales data: starter tier, which represents home sales prices at the bottom third of the market price distribution; mid-tier, which represents home sales prices in the middle third of the market price distribution; and the luxury tier, which represents home sales prices in the top third of the market price distribution.
“Potential first-time homebuyers suffer the most from affordability challenges, as they lack the equity from an existing home to bring to the closing table. Yet, first-time homebuyer demand appears to be resilient, since annual price growth in the starter home price tier remained positive in 25 of the top 30 markets we track in August,” said Fleming. “Notably, many of the top markets for growth in starter home prices are those that are relatively more affordable, such as Pittsburgh, Baltimore and St. Louis.”
The full report can be found here.