Investing in a home today will mean disappointing returns in a year

While many residential real estate investors who buy-to-flip will add value to a property in need of renovation, for those that intend to buy now and sell in the next year without significantly improving the asset, returns are likely to disappoint.

US national home price growth is trending lower and appreciation by summer 2025 could be less than half what it is today, according to a new report released this week.

The CoreLogic Home Price Index and HPI Outlook shows that, in June, growth was 4.7% year-over-year, down from 4.9% in May and part of a slowdown that is likely to continue for some time. The firm’s outlook is that prices will grow by just 2.3% year-over-year by summer 2025.

Although prices are still rising, June posted only a 0.3% increase month-over-month and the outlook calls for the same rate from June to July as high mortgage rates maintained barriers for many would-be homebuyers.

“The 0.3% gain in prices from the month before was less than half the increase seen between May and June prior to the pandemic, when the gains averaged 0.8%,” said Dr. Selma Hepp, chief economist for CoreLogic. “In addition, cooling home prices continued to spread across more markets, and nine states reported a monthly decline, up from three states last month. The April surge in mortgage rates notably weighed on consumer sentiment, and consumers increasingly chose to respond to the anticipation of a lower mortgage rate environment later this year.”

South Dakota was the only state to see a double-digit annual price gain in June (10%) but some others came close and were above the national average including New Jersey (9.3%), Rhode Island (9.2%), Connecticut (8.5%), and New Hampshire (8.2%).

By large metro, Miami was the standout market with a 10% gain year-over-year followed by San Diego and Las Vegas (both 7.5%) and Chicago (7.2%).

While price growth has been slowing for some time, the average US homeowner still managed to grow their equity by $28,000 year-over-year in the first quarter of 2024.