Signs of a “stagnant late-spring housing market“ emerged in June as U.S. home prices declined for the first time this year and purchase mortgage locks fell by 8% year over year.

That’s a key takeaway from the June 2024 Market Advantage report released Wednesday by Optimal Blue. The report, which covers the 20 largest U.S. metro areas, shows that the average home purchase price of $478,800 in June was down about $1,500 compared to May. The volume of locked loans (including purchases and refinances) rose 2% from the prior month when accounting for fewer days of production in June.

“Despite an improvement in interest rates, purchase activity was subdued in June,” Brennan O’Connell, director of data solutions at Optimal Blue, said in a statement. ”However, many homeowners with higher rates — particularly those who closed on their mortgage in the last 12 to 18 months — jumped at the opportunity to refinance, even for a small reduction in monthly payments.

“This behavior speaks to the ongoing inventory and affordability challenges consumers are experiencing. As we look toward the back half of 2024 and the potential for rate relief from the Fed, purchase lock counts will provide insight into if and when production will turn the corner.”

Optimal Blue noted that a pullback in mortgage rates, which ended June at 6.938% for 30-year conforming loans, drove a significant increase in refinances. Rate-and-term refis jumped 39% from May to June, while cash-out refi activity was up 11% during the month. The average loan size in June was down slightly to $374,200.

Locked loan volumes dropped by double digits during the month in most of the metro areas analyzed, although the declines were less severe in cities like Boston (-4.7%), Baltimore (-5.7%), Los Angeles (-7%) and San Francisco (-7.3%).

Conforming loans comprised 55.9% of all locks last month, although that share was down by 2.5% percentage points compared to June 2023. Nonconforming loans and U.S. Department of Veterans Affairs (VA) loans have seen their market shares increase over the past year to 13.5% and 11.7%, respectively.

Pull-through rates — the percentage of locked loans that are funded — have had divergent paths over the past year. Lenders had an 82% pull-through rate on purchase loan locks in June, up 140 basis points from the same month in 2023. But only 58.5% of locked refinances were funded, down 467 basis points during the year.