Residential property prices in the US rose by 1.2% in the second quarter of the year as the number of homes coming on to the market failed to keep up with housing demand, according to the Federal Housing Finance Agency (FHFA) House Price Index.

During Q2, home prices increased in every state except Vermont. The biggest quarter-on-quarter gains were witnessed in Oregon, Washington, Colorado, and Florida.

But the rate of home price gains actually marks a slowdown compared with recent growth levels, as reflected by FHFA’s seasonally adjusted monthly index for June which was up 0.2% from May, “a much more modest pace of appreciation than we’ve seen in some time”, according to Andrew Leventis, FHFA supervisory economist.

The June index of 0.2% was below economists’ forecast of 0.3%, and Leventis said that the slowdown in the market reflects mounting pressures from falling home affordability.

He added: “Although the appreciation rate for the second quarter was of similar magnitude to what we’ve been seeing for several years now, a close look at the month-over-month price changes during the quarter reveals a potentially significant market shift.”