Home Price Growth Slowed in July. It Could Help Home Sales.

A home for sale in Alhambra, Calif. (FREDERIC J. BROWN/AFP via Getty Images)

Key Points

• National home prices increased by 1.7% year-over-year in July, with prices in 20 large metropolitan areas rising by 1.8%.
• New York, Chicago, and Cleveland saw the strongest gains, with prices increasing by 6.4%, 6.2%, and 4.5% respectively.
• Prices declined in seven markets, including Tampa, San Francisco, and Miami, which fell by 2.8%, 1.9%, and 1.3% respectively.

Home prices kept cooling in July, new data show. Slower price gains, combined with lower mortgage rates, might be facilitating more deals, recent data suggest.

Home prices in July rose 1.7% from one year prior, according to an S&P Cotality Case-Shiller index measuring prices nationally. Prices in 20 of the nation’s large metropolitan areas rose 1.8%, slightly exceeding consensus estimates calling for 1.7% but logging the sixth straight month of slowing growth.

For much of the past three years, high costs and buyer hesitancy kept deals relatively scarce. Existing-home sales measured by the National Association of Realtors have largely hovered around an annual rate of four million this year through August. That is well below the long-term average monthly rate of over five million.

Of the 20 large metropolitan areas, gains were strongest in New York, Chicago, and Cleveland. Prices in these metros logged 6.4%, 6.2%, and 4.5% increases, respectively.

“Many Northeastern and Midwestern markets, which saw relatively modest price growth in the pandemic, are now among the nation’s top performers,” Nicholas Godec, S&P Dow Jones Indices’ Head of Fixed Income Tradables & Commodities, said in a statement. “By contrast, several Sun Belt and West Coast markets that were recently red-hot are now faring far worse.”

Prices dropped from year-ago levels in seven markets. Chief among them were Tampa, San Francisco, and Miami, where prices fell 2.8%, 1.9%, and 1.3%, respectively

It’s likely that more choices are helping cool prices. In August, the most recent month for which separate Realtor.com data are available, each of the 20 metros saw more active listings than one year prior. Listings rose as much as 55% from one year prior in Washington, D.C., followed by a 48% increase in Las Vegas and a 37% gain in San Diego. (Both Barron’s and Move, which operates Realtor.com, are owned by News Corp.)

“July’s results reinforce that the housing market has downshifted to a much slower gear,” Godec said, noting that home values are rising slower than inflation measured by the consumer price index.

But more recent data show that buyers and sellers, after a big break, might be coming back to the table—though those deals have yet to close. Pending home sales in August, a read of contract signings, rose 4% to the highest level since March, the National Association of Realtors said Monday. The reading follows recent new home sales data which rebounded strongly in August, though economists expect downward revisions.

More data will be needed to say whether or not it’s a blip—but it could be a sign that lower mortgage rates are drawing at least some buyers and sellers back to the closing table during housing’s typically cooler months.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com