House price growth exceeds inflation with an annual increase of 5.4%

US home price growth slowed in June as buyers pulled out of the market as the odds started to rise.

According to data from S&P CoreLogic Case-Shiller, prices rose 5.4% from a year earlier by a national measure. That compares with an annual increase of 5.9% in May.

While supply is increasing, home seekers still struggle to find affordable housing. But thanks to the high mortgage interest ratesthere are not enough buyers in the market to create the level of competition that would drive prices up significantly. The Case-Shiller index for June follows a three-month period beginning in April, a time when 30-year borrowing costs have largely hovered around 7%.

The price data shows “real above-trend price performance when inflation is taken into account,” Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement on Tuesday. “Housing prices and inflation continue to play a role on the political agenda in the election season.”

Although both house price growth and inflation have slowed, “the gap between the two is wider than historical norms, with the national index averaging 2.8% more than the consumer price index,” Luke said. “That’s a full percentage point above the 50-year average.”

The Federal Reserve does is expected to start cutting rates next monthpossibly creating some downward pressure on mortgage costs. But many economists expect much deeper declines will be needed to push reluctant buyers and sellers out of the gate.

A measure of prices in 20 cities rose 6.5% from a year earlier, compared with an annual increase of 6.9% in May. New York saw the highest increase in June, followed by San Diego and Las Vegas with 8.7% and 8.5% respectively.