The slowdown in price growth, as reported in First American’s HPI for June 2024 to July 2024, was even more significant than initially estimated. The monthly appreciation rate was revised down from 0.3% to just 0.1%.
Looking ahead, one key question is whether falling mortgage rates will attract more buyers back into the market. The Federal Reserve is widely expected to cut interest rates, potentially easing some of the pressure on homebuyers.
However, Fleming noted that many potential buyers are also sellers who are locked into their existing low-rate mortgages, making them reluctant to move even if mortgage rates decrease slightly.
“Most buyers are also sellers, and they will remain significantly rate locked-in by their current low-rate mortgages, so modestly lower rates may not spur significant numbers of buyers into the market,” he explained.
While affordability remains a major obstacle, especially for first-time buyers who don’t have the equity of an existing home, demand for starter homes has stayed relatively strong. First American’s report found that annual price growth in the starter home segment remained positive in 25 of the top 30 markets tracked in August.