Price appreciation slips under 5% for first time since last fall

Annual home price appreciation during May shrank to its slowest pace since last October but in areas where inventory remains tight, particularly the Northeast, values are still under pressure, Corelogic said.

Year-over-year prices increased by 4.9%, the slowest since October 2023, which was also the last time the nationwide pace was under 5%, according to its Home Price Index. This measurement is separate from the one Corelogic issues with Standard & Poor's and Case-Shiller.

The latest month's year-over-year appreciation compared with an annual increase of 5.3% in April and 1.4% growth in May 2023.

Prices rose 0.6% from April to May, Corelogic reported.

"While national annual home price growth continues to slow as anticipated, cooling appreciation over the past months is now observed in more markets, as the surge in mortgage rates this spring caused both slowing homebuyer demand and prices," said Selma Hepp, chief economist for CoreLogic, in a press release.

"However, persistently stronger home price gains this spring continue in markets where inventory is well below pre-pandemic levels, such as those in the Northeast," she added.

Of the 10 states with the largest annual price increases, the top four are in the Northeast: New Hampshire, 12%; Rhode Island, 9.8%; New Jersey 9.8%; and Connecticut, 9.6%. Maine was also in the top 10 at 7.4%.

"Also, markets that are relatively more affordable, such as those in the Midwest, have seen healthy price growth this spring," Hepp said.

The Midwest states in the top 10 include Wisconsin ranked fifth at 8%, while Illinois, Ohio and South Dakota all had 7.4% annual home price increases. The only state outside those two regions with large annual price gains was Virginia, which was sixth overall at 7.5%.

"On the other hand, markets with notable inventory increases, including those in Florida and Texas, continue to see annual deceleration that is pulling prices below numbers recorded last year," said Hepp.

Going forward, Hepp predicted prices will grow by 0.7% between May and June but by 3% through May 2025.

The metropolitan areas with the largest annual price gains were San Diego at 9.2%, Miami at 8.5% and Las Vegas at 7.8%.