Rate of increase of home prices slows in April, according to ICE’s Mortgage Monitor

The June 2024 ICE Mortgage Monitor Report shows that annual home price increases slowed a bit in April.

This marks the second consecutive month of pullbacks, according to the report, which is produced by Intercontinental Exchange.

Specifically, The ICE Home Price Index rose 5.1 percent in April, down from 5.7 percent in March and 6.1 percent in February., the cooling is apparent from both seasonally adjusted and unadjusted perspectives.

“With 30-year rates easing and affordability improving entering the year, unadjusted monthly price gains had been running above their same-month 25-year average since the start of 2024,” ICE’s Vice President of Enterprise Research Strategy Andy Walden said. “However, softening price growth in April has dropped us below that long-run average. We’ve seen the rate of appreciation slow on an adjusted level as well, with April’s +0.28% increase in home prices a marked downshift from +0.45% in March. That’s equivalent to a +3.4% seasonally adjusted annual rate, suggesting annual growth will likely continue to slow in coming months.”

If adjusted monthly gains were to continue at their current pace of 0.28 percent per month, the annual growth rate metric would fall below 4.25 percent in June. And by July, home prices would see year-over-year gains of less than 4 percent at this trajectory.

However, Walden pointed out that both constrained supply and demand and interest rate movements in either direction can impact prices.

“While we’ve made meaningful strides in terms of inventory improvement, there are still roughly 36% fewer listings than normal for this time of year. Likewise, in the face of higher rates as well as prices, purchase mortgage demand remains about 45% off comparable periods in 2018 and 2019. As we’ve seen in recent years, any substantial move in rates can result in those supply/demand dynamics shifting quickly, either bolstering or softening home prices,” Walden said.

The report showed improvement in the number of homes for sale nationwide, with inventory up 30 percent year over year in April to its highest seasonally adjusted level since mid-2020. Also, nearly 90 percent of U.S. markets have stronger inventory levels than at this time last year, with inventory in 14 of the largest markets having returned to pre-pandemic levels.

“Inventory seems to be the primary differentiator when it comes to the bifurcation we’re seeing in housing market temperatures across the country,” Walden said. “Generally speaking, the Northeast and Midwest still face deep deficits in available homes for sale, helping prices continue to run hot. On the other end of the spectrum, prices are softening in Florida and Texas as for-sale inventories rise in both states. Then you’ve got California, where affordability and inventory are in a steel cage match to determine dominance. In April, each of the state’s top 10 markets either registered below-average growth or clocked adjusted price declines.”

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