U.S. Home Prices Are Rising at the Slowest Pace in Nearly a Year and a Half

Redfin reports price growth is slowing thanks to a small uptick in new listings as elevated mortgage rates keep buyers at bay

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — U.S. home prices rose 0.3% month over month in May—the smallest increase on a seasonally adjusted basis since January 2023, per a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Prices climbed 7.2% from a year earlier, but annual growth showed signs of plateauing.

This is according to the Redfin Home Price Index (RHPI), which uses the repeat-sales pricing method to calculate seasonally adjusted changes in prices of single-family homes. The RHPI measures sale prices of homes that sold during a given period and how those prices have changed since the last time those same homes sold. It’s similar to the S&P CoreLogic Case-Shiller Home Price Indices but publishes more than one month earlier. May data covers the three months ending May 31, 2024.

While home prices remain at record highs, the pace at which they’re growing has slowed because even though we’re still in a severe housing shortage, it’s not quite as severe as it was last year. New listings have been inching upward, which has taken a little pressure off of sale prices because buyers have more options to choose from. Listings should continue to tick up slowly as the mortgage rate lock-in effect continues to wear off; eventually, the people who don’t want to move because they have an ultra-low mortgage rate have to move.

“We learned last week that inflation continued to cool in May, which means mortgage rates could decline in late summer or early fall,” said Redfin Economics Research Lead Chen Zhao. “A drop in mortgage rates would bring both buyers and sellers back to the market, which could either accelerate price growth or pull it back depending on who comes back with more force. If sellers come back faster, prices would likely cool, but if buyers come back faster, prices would likely ramp up.”

New listings rose 0.3% month over month in May on a seasonally adjusted basis and climbed 8.8% from a year earlier, though they were still roughly 20% below pre-pandemic levels.

Home price growth started to ease at around the same time that new listings started to tick up last year; new listings saw their first notable increase in August 2023, and monthly price growth began cooling during the three months ending Oct. 31, 2023.

To view the full report, including charts and metro-level data, please visit:

https://www.redfin.com/news/home-prices-smallest-increase-over-a-year

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240618338682/en/

Contact Redfin

Redfin Journalist Services:

Ally Braun, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

How much did U.S. home prices increase in May 2024?

U.S. home prices rose by 0.3% month-over-month in May 2024 according to Redfin.

What was the annual growth rate of U.S. home prices in May 2024?

The annual growth rate of U.S. home prices was 7.2% in May 2024.

Why is the growth of U.S. home prices slowing?

The growth of U.S. home prices is slowing due to a slight increase in new listings and high mortgage rates keeping buyers at bay.

What does the Redfin Home Price Index measure?

The Redfin Home Price Index measures seasonally adjusted changes in prices of single-family homes using the repeat-sales pricing method.

What was the monthly increase in new listings in May 2024?

New listings increased by 0.3% month-over-month in May 2024.

How do current new listings compare to pre-pandemic levels?

Current new listings are roughly 20% below pre-pandemic levels.

What impact could cooling inflation have on mortgage rates?

Cooling inflation could lead to lower mortgage rates in late summer or early fall.