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Annual home price growth dropped below 2 percent for the first time in 11 years as elevated home prices and mortgage rates continued to inhibit buyers and sellers, according to data released Tuesday by CoreLogic.
Single-family home price growth slowed to an annual increase of 1.4 percent in May after increasing 2 percent a month earlier, according to the data. On a monthly basis, however, prices increased 0.9 percent between April and May.
“After peaking in the spring of 2022, annual home price deceleration continued in May,” CoreLogic Chief Economist Selma Hepp said in a statement. “Despite slowing year-over-year price growth, the recent momentum in monthly price gains continues in the face of recent mortgage rate increases.”
The monthly increases recorded in recent months are significantly smaller than those seen during the height of the pandemic, signaling a gradual return to pre-COVID growth levels, Hepp added.
“Following a cumulative increase of almost 4 percent in home prices between February and April of 2023 elevated mortgage rates and high home prices are putting pressure on potential buyers,” she said. “These dynamics are cooling recent month-over-month home price growth, which began to taper and is returning to the pre-pandemic average.”
Western states shouldered the biggest declines in price growth as Americans continued to make their way back to urban centers they fled during the pandemic as work-from-home mandates proliferated nationwide. Idaho, a boomtown early in the pandemic, recorded the highest annual price decrease at 8 percent, followed by Washington at 7.5 percent and Nevada at 5.6 percent.
Home price growth was most dramatic in Miami, where prices surged 11.8 percent year over year. The next highest gains were recorded in Atlanta and Charlotte, North Carolina, with each notching annual gains of 4.4 percent.
Statewide, Maine saw the highest rate of annual appreciation in May at 7.2 percent, followed by New Jersey at 7.1 percent and Indiana at 6.9 percent.
