The decline marks the first negative year-over-year reading since mid-2023, with prices dropping 1.4 per cent in just the last three months.
This cooling trend follows years of rapid price growth during the pandemic era.
Jason Lewris, co-founder of Parcl Labs, points to specific market conditions driving the change.
“More recently, we have seen a period of national softness emerging after the rapid run-up during the Covid years, 2020 to 2022,” Mr Lewris told CNBC.Â
“The sharp increase in mortgage rates in 2022 and 2023 created an affordability shock: buyers were priced out, sales volumes dropped, and sellers had to adjust expectations.”
While the national decline is modest, several markets are experiencing more significant drops.
Austin leads with a 10 per cent year-over-year decrease, followed by Denver at 5 per cent, while Tampa and Houston both recorded 4 per cent declines.
Not all markets are cooling, however.
Cleveland shows strong 6 per cent price growth, with Chicago and New York City both gaining 5 per cent. Philadelphia, Pittsburgh, and Boston also remain in positive territory.
Housing inventory, while still historically low, has increased nearly 13 per cent compared to last year.
However, new listings rose just 1.7 per cent, suggesting many homeowners remain reluctant to sell in the current environment.
Mortgage rates have remained relatively stable over the past three months, showing minimal reaction to the Federal Reserve’s latest rate cut.
This stability suggests home prices may continue their current trajectory in the near term.
Looking ahead, experts anticipate a period of modest price movements rather than dramatic shifts.
The severity and direction will largely depend on broader economic conditions and mortgage rate trends.
“Our base case from here is not a deep national downturn, but a period where prices hover around zero, with small positive or small negative year-over-year changes, rather than the double-digit gains of the pandemic era,” Mr Lewris said.
“How far they move in either direction will depend mainly on mortgage rates and the broader health of the economy.”
