U.S. Home Prices Remain Unchanged in May

WASHINGTON (Reuters) – U.S. single-family home prices remained stable in May, with the annual increase at its lowest in 10 months due to higher mortgage rates dampening demand and increasing housing supply.

The unchanged house prices followed a 0.3% month-on-month rise in April, as reported by the Federal Housing Finance Agency (FHFA) on Tuesday. Prices increased by 5.7% in the 12 months leading to May, the smallest year-on-year growth since July 2023, down from a 6.5% gain in April.

A rise in mortgage rates during spring led to a decrease in sales, resulting in existing home inventory reaching its highest level in nearly four years by June. Additionally, new single-family housing supply surged to its highest level since February 2008.

The average rate on the popular 30-year fixed mortgage has recently decreased from a six-month peak of 7.22% in early May to an average of 6.78% last week, according to Freddie Mac data. Residential investment, encompassing homebuilding and sales, contracted in the second quarter after experiencing double-digit growth in the first quarter of the year.

All nine census regions reported annual house price gains in May, with significant increases in New England and the Middle Atlantic regions. The West South Central and Pacific regions reported moderate price growth compared to others.