Is a buyer's market finally emerging?

Transcript:  

Allie Barefoot:  

I’m Allie Barefoot with Cotality and we’re back with another conversation about data in context. This episode is part of a mini-series on this channel that takes a deeper dive into Cotality’s Monthly Home Price Index report.   

In June, home price growth slowed to under 2% — well below the rate of inflation. That kind of cooling could be a sign that affordability is slowly returning, at least in some markets. If this trend continues, we could start seeing more for-sale signs and, potentially, more price flexibility for buyers who’ve been waiting on the sidelines.    

We’ll take a look at the data with Cotality’s Chief Economist Selma Hepp. So, to break down what the data is signaling for the future of the housing market, let’s get to questions with Selma.

Allie Barefoot:

Selma, thank you so much for being here for Data in Context.  

Selma Hepp:  

Thank you so much for having me, Allie.  

Allie Barefoot:  

So this is going to be a part of a mini-series that you and I are going to get together once a month and talk about coastal cities monthly home price index. I'm very, very excited for this mini-series. And from what we just saw from the August Home Price Index report, I kind of just want to throw a softball question out there really quick and ask you, what are the key pricing trends that you're seeing the property market right now?  

Selma Hepp:  

So one of the main trend that we continue to see is decelerating home price appreciation. Last year around this time, home prices were growing at about 5% rate. Now there are down to only about 1.7%. That's really slow, considering where we've been over the last five years at least, and even going back to 2012. What's happening in the market is that we have continued, elevated mortgage rates. They're constraining affordability. Home prices have gone up a lot over the last five years. And that has really weakened demand. On top of that, now we have a lot of inventory, or at least a lot more than we've had during the pandemic. And so we're seeing rebalancing in the housing market between what, sellers can get and what buyers, are willing to pay. And you notice that, you know, over the last five years, there's been a lot of changes in terms of pricing in the property market.

Allie Barefoot:  

So knowing that we just got the June 2025 home price Index report back, what were you seeing was different from June 2024, and have we seen any signs of stabilization or possibly further disruption in that one year?  

Selma Hepp:  

Yeah. So we did continue to see a deceleration in home price growth in some markets. That deceleration has been larger. And as a result of that on annual on a year over year basis, when you compare home prices in some markets, they are down. And actually the number of markets will we see that deceleration happening has is growing. There's more markets now where home prices have either been, leveled off or they're declining. There are a few markets left where you have seen, acceleration of home price appreciation or home price appreciation has remained elevated. That for example, in markets in northeast, we do continue to see high single digit appreciation. And for example, in the state of new Jersey for example, in our latest report, we saw that, home price growth actually accelerated again. And that's really interesting to me, especially in the northeast areas as well.  

Allie Barefoot:  

Something that stood out to me was what we saw in June was 20% of nearly a thousand large and small metro areas. They saw home price reductions. So I'm wondering why are sellers starting to lower their prices?  

Selma Hepp:  

Yeah. So because we have a lot of a lot more inventory now and again, not in all market, especially not in those in northeast where home prices continue to go up, but those where home prices are declining. We have a lot more inventory now. So for sellers who really need to or want to sell, they have more competition from other sellers. And so they're having to lower their price in order to, get buyers to come in.  

Allie Barefoot:  

And having more inventory, which is music to my ears. I know a lot of people are wondering right now, could we possibly be on the brink of a buyer's market? Is that what this demand is, kind of signaling?  

Selma Hepp:  

Yes, absolutely. In some markets, there's definitely more. Inventory out there than there are buyers. And so that that means that the inventory is leaning in buyers advantage, and buyers are more able to negotiate with sellers. So but not all markets. Again, it's this we are currently in an environment of very regional, differences across, housing markets in the US. And we've seen that housing market prices, the growth is going down overall. And you pointed that out at but the price tags are also rising simultaneously. So it's a bit of a double entendre there. But just from May of 2025 to now, June of 2025, we saw the home price growth rise from there. The median home price from 400,000 to $403,000.

So is the trend down in price growth indicative for what's to come? Well, if we indeed do see that year over year change turned negative, that's when you would see, lower home prices today versus where they were last year. The fact is that home prices are still up that 1.7%. We started off talking about, and that is how we are going from $400,000 to $403,000.

Allie Barefoot:  

Right no, that makes sense. And I mean, so you and I know that the home price is really just one box. You have to check when it comes to affording a house. And it is very important box to check. But there's also mortgages and insurance. And what did you see from this latest home price index report in terms of mortgage rate and insurance premiums? How did that affect buyer demand in June?  

Selma Hepp:  

Yeah, in general, what we've seen over the course of last year is the combination of high mortgage rates and rising insurance premiums has dampened homebuying demand. Now that continue to be so. In June of 2025, since mortgage rates are still elevated, and we do continue to see the rate of increases in insurance premiums go up. And again, that's very concentrated in certain markets. And so it's also constraining home buyer activity in some markets that getting insurance is very expensive. And sometimes very difficult. That's where we do see, a number of transactions that actually don't go through because buyers are not able to obtain homeowners insurance.  

Allie Barefoot:  

Right. And let's say, you know, somebody is able to afford the price listed on the for sale sign, but maybe mortgage and insurance premiums aren't in their favor right now. This may lead them to continue to rent in an apartment or condo of some sort. How is this going to affect rent prices down the line?  

Selma Hepp:  

Yeah, it's very interesting. So in our single-family rent index, what we do observed over the course of last year is that rents are oscillating, rent growth is oscillating between 2.5% and 3%. And that's different from what we've talked about, what we're seeing in home price, or in a home buying market in terms of home prices where you see continued deceleration. So, what this, stabilization in rent growth means to us that we continue to see pretty steady demand for single family rentals, and that's keeping that rent growth pretty stable. So because people are not able to buy, they can't afford, you know, insurance, everything else we talked about, they are remaining in the renter’s market.  

Allie Barefoot:  

Right. And we know that there are certain areas where are a little bit more favorable and gentler to potential home buyers than others, and that's just always probably going to be a situation. But we have seen some states where, for example, a West Virginia, there has been some increase and decrease in home price growth. But and that goes along with affordability and population growth. So are there other U.S. markets that are on a similar path of maybe becoming a hot commodity in the property market?  

Selma Hepp:  

Yeah. So, you know, most recently home price growth has been driven in large part by migration patterns. And so, you know, we talked about slowing home price growth in Florida, for example. And we do know that rate of in-migration to Florida has slowed the most among all states in the in the U.S. Virginia is an interesting example. West Virginia, I'm sorry, is an interesting example because, it is a state that offer it's very affordable. There are areas that have access to large employment centers, such for example, access to Washington DC, or access to other larger employment centers. And we have seen growth in population there. On top of that, the state has provided some incentives for first time home buyers and those working from home to come live in the state. And that has, led to West Virginia now being in top five states, for strongest home price appreciation in the U.S.  

Allie Barefoot:  

I see why if I had incentives to possibly work from home, I think I would like the state of West Virginia as well. I don't have any other questions for you, but I do know that next month is going to be very interesting as well, and I cannot wait to break down Cotality’s Home Price Index with you next month on our mini-series, Selma.  

Selma Hepp:  

I look forward to it as well.

Allie Barefoot:  

Thank you so much for listening and thank you again to Selma Hepp and everybody who made this show possible. If you haven’t already go ahead, leave a review, hit that like button, and be sure to subscribe that way you guys are in the know with Cotality’s Data in Context.