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Where house prices are falling fastest, and 9 other things to know about the property market right now, according to experts
House prices are falling fastest in Austin, Texas, as demand begins to cool in the former boomtown.
In part due to a thriving tech industry in the city and low state taxes, Austin has seen an influx of new residents in recent years - pushing up property values.
But prices are now beginning to slide. In the year to May, Austin saw a 3.5 percent decline in home values - the most of the top 100 markets in the US.
Soaring mortgage rates have slowed sales, which has cooled home prices is more markets across the country.
This is according to the latest report from financial services company CoreLogic, which revealed the ten things Americans need to know about the housing market landscape right now.
In part due to a thriving tech industry in the city and low state taxes, Austin has seen an influx of new residents in recent years - pushing up property values
1. Annual home price appreciation is slowing in more markets
On a national level, annual home price appreciation - the increase in a property's value over time - was 4.9 percent in May.
But five markets saw declines year-over-year to May. Following Austin, San Francisco, California, saw a 2.6 percent decline, while New Orleans, Louisiana, saw a 0.9 percent fall in home values.
The Florida cities of Cape Coral and North Port, which were also hubs for Americans looking to relocate during the pandemic, saw prices fall 0.6 percent and 0.2 percent, respectively, in the year to May.
2. Spring home price appreciation continued to slow
Home prices were up 0.6 percent in May from the month prior, according to CoreLogic.
But high mortgage rates of around 7 percent for a 30-year fixed-rate deal this spring led to more markets seeing prices start to cool.
In May, among the 100 largest metros, 16 metros saw prices decline from the month before, with El Paso, Texas, Gary, Indiana, Buffalo, New York, and Syracuse, New York, leading in the top five spots.
3. A third of homes are selling over the asking price
In June 2024, 34 percent of homes sold over the asking price - which is above the pre-pandemic 23 percent average seen between 2015 and 2019.
Homes are tending to sell for above the asking price as a result of strong homebuyer demand in markets where prices are high and inventory is lacking, the report found.
4. Delinquent mortgages on the rise
Approximately 100,000 borrowers were six months or more past due on their mortgages in May - a level not seen since before the financial crisis.
However at the same time the share of mortgages in foreclosure fell to 0.2 percent, which was the lowest share since early 2022.
This indicates that many borrowers who were in the late stages of delinquency were able to avoid foreclosure, according to CoreLogic.
5. Adjustable-rate mortgages increasingly popular
The share of adjustable-rate mortgage (ARM) originations rose to the highest level so far this year in May.
The interest rate on an ARM mortgage, also known as a variable-rate mortgage, changes periodically based on market rates - rather than remaining the same for the entire loan as is the case for a fixed-rate deal.
ARMs have gained renewed interest as mortgage rates have risen from below 3 percent during the pandemic to record levels over the past two years.
6. ARM share remains low
Despite this increase in popularity, the ARM share of total outstanding mortgages still remains relatively low at 5 percent, CoreLogic found.
Variable-rate mortgages made up around 20 percent of outstanding mortgages leading up to the financial crisis, but this fell to just 4 percent during the pandemic.
7. Smaller appraisal gap
Among all home sales in the process of closing, 8.6 percent were appraised below the contract sales price in June, down from a rate of 10.7 percent a year ago.
An appraisal is a process through which a real estate professional will determine the fair market value of a property.
This change brings the appraisal gap back to pre-pandemic levels, the report found.
Appraisal gaps are more prevalent among small starter homes than among larger, more expensive homes, which may reflect a higher risk of overpayment by inexperienced first-time homebuyers.
San Francisco, California, saw a 2.6 percent decline in home price appreciation in the year to May, CoreLogic found
In June 2024, 34 percent of homes sold over the asking price, the report found
8. Sales of newly-built homes are down
Through the first six months of the year, sales of newly-built homes are down 17 percent - with nearly all markets seeing declines.
Of the 30 major US metros, only Portland, Oregon, and Las Vegas, Nevada, showed increases in newly built home sales so far this year. Both metros were up 2 percent year-to-date, the report found.
9. Investor home purchases decreasing
Investors made 23 percent of all single-family home purchases in June 2024, down 5 percentage points from January 2024, the report found.
This is the lowest the investor share has been in two years, but is still well above pre-pandemic levels, when the share averaged 17 percent.
10. Existing home sales plummet
Sales of existing homes declined 19 percent in June compared to last year.
While existing home sales historically have a seasonal slowdown in July, this came early this year - likely driven by a surge in mortgage rates in April and May.
At the same time, June pending sales ended up 9 percent compared to 2023, which suggests there could be some potential recovery of closed sales coming down the line.