Home-price growth continued to decelerate in June, the latest sign that lower mortgage rates are providing little boost to a housing market that has been slowing for the past year.
Average national home prices grew 3.1% in the year ending in June, according to the S&P CoreLogic Case-Shiller National Home Price Index, down from a 3.3% annual pace the prior month.
Price growth has now been slowing for the longest period since the 2008 housing crash, a sign that the latest housing boom is coming to an end. Mortgage rates have fallen roughly a percentage point since November but thus far that has done little to reverse the slowdown in both prices and sales.
The Federal Housing Finance Agency House Price Index, also released Tuesday, similarly showed that home-price growth has decelerated for the last 15 months. Home prices rose just under 5% in the second quarter compared with a year earlier, a significant slowdown from nearly 7% appreciation during the same period in 2018.
“The majority of states and cities are experiencing slower house price gains than they did a year ago, even with constrained housing supply and extremely attractive mortgage rates,” said William Doerner, a supervisory economist at FHFA.
Prices are growing fastest in secondary cities, where homes are still relatively affordable. Boise, Idaho, had the fastest annual home-price appreciation in the second quarter at 13.6%, followed by Grand Rapids, Mich., at 9%, according to the housing finance agency.
Price gains were much weaker in coastal markets. Seattle, the New York City metro area and Oxnard, Calif., were all in the bottom 10 cities for price appreciation in the second quarter.
Still, economists said there are signs that price growth is stabilizing and a crash in prices looks unlikely. Price growth slowed in a dozen cities in June compared with a year earlier, a slight improvement from 13 cities in May, according to Case-Shiller. Seattle was the only city out of 20 in the Case-Shiller index that experienced actual price declines.
“While housing has clearly cooled off from 2018, home price gains in most cities remain positive in low single digits,” said Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices.