Home price growth pace increased in 2Q

Home prices nationwide increased 3% in the second quarter year-over-year, compared with the same period in 2022, a slight slowdown from the annual pace for the first quarter, the Federal Housing Finance Agency found.

They were up 1.7% quarter-to-quarter, the highest gain since the second quarter of 2022, when prices rose 3.3% from the first quarter of that year.

"U.S. house prices appreciated at a slightly higher rate in the second quarter amid low inventory," said Anju Vajja, principal associate director in the Division of Research and Statistics, in a press release. "While prices in a number of western states continued to decline year-over-year, house prices rose in all states quarter-over-quarter."

Price growth did slow on a monthly basis, to 0.3% in June after two consecutive periods where values increased by 0.7%.

But regional variations in trends resulted in prices declining on an annual basis by 2.1% for the Mountain states and 2% in the Pacific states. On a state level, Nevada had the largest year-over-year depreciation in prices at 5.3%. Overall eight states and the District of Columbia reported value drops.

The East North Central census division had the highest annual rate of appreciation at 5.4%. On a state level, New England's Maine and Connecticut had the highest rate of appreciation at 7.6%, followed by New Hampshire at 7.1%.

Meanwhile, the S&P CoreLogic Case-Shiller U.S. National Home Price Index was flat in June compared with one year prior, an improvement from the 0.4% price drop in May.

When looked at against May, prices grew 0.7% on a seasonally adjusted basis and 0.9% unadjusted. That makes the index 0.02% lower than its peak one year ago, said Craig Lazzara, managing director at S&P Dow Jones Indices, in a press release.

"June is the fifth consecutive month in which home prices have increased across the U.S.," Lazzara continued. "With 2023 half over, the National Composite has risen 4.7%, which is slightly above the median full calendar year increase in more than 35 years of data."

The national index is currently 67% above its peak in July 2006 during the boom period and 130% higher than it was during the bust month of February 2012.

"While home prices have remained strong in 2023, elevated mortgage rates complicate the situation for potential homebuyers, a trend that will likely constrain additional price gains for the rest of the year," Selma Hepp, chief economist at CoreLogic, said in a separate statement. "Nevertheless, home prices are still expected to reaccelerate and reach mid-single-digit growth rate by the end of the year, according to CoreLogic's latest HPI forecast."

(In addition to being a part of the Case-Shiller Index, CoreLogic releases its own HPI earlier in the month.)

A Moody's Investors Service report on housing affordability issued Aug. 10 paints a mixed picture on price growth going forward.

"While U.S. existing home prices will likely decline somewhat on a national basis through next year, price levels will remain high, stretching affordability and pushing some prospective buyers out of the market," the report said. "Furthermore, as inflation remains higher than pre-pandemic levels, persistently elevated mortgage rates will uphold housing costs."