US home prices started the summer at a record high while the pace of price increases moderated in June.

The S&P CoreLogic Case-Shiller National Home Price Index increased 0.2% over the prior month in June on a seasonally adjusted basis, less than the 0.3% rise seen in May but marking a fifth straight monthly increase and an all-time high for the index.

On an annual basis, prices nationally rose 5.4%, less than the 5.9% jump seen in May.

The index tracking home prices in the 20 largest US cities gained 0.4% in June from May, exceeding the Bloomberg consensus estimate of 0.3% while matching May's monthly jump. The 20-city index rose 6.5% compared to last June.

“The S&P CoreLogic Case-Shiller Indices continue to show above-trend real price performance when accounting for inflation,” Brian Luke, head of commodities and real and digital assets at S&P Dow Jones Indices, wrote in a statement.

“Home prices and inflation continue to factor into the political agenda coming into the election season. While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index."

Read more: When will housing prices drop?

Affordability challenges remain

New York reported the highest year-over-year gains among the 20 metro areas tracked by Case-Shiller in June, with annual price gains clocking in at 9%. San Diego and Las Vegas followed with gains of 8.7% and 8.5%, respectively.

Tuesday's report shows prices reaching records ahead of the recent drop in mortgage rates, which fell to the lowest level since May 2023 last week as investors anticipate rate cuts from the Fed beginning next month.

Data out earlier this month showed the NAR's affordability index dropped to 93.3 in June from 93.5 in May and 93.7 a year ago. Any value below 100 means the typical family cannot afford a median-priced home.

Read more: Which is more important, your interest rate or house price?

The affordability index gauges how well a typical family can manage to spend up to 25% of their qualifying income on a mortgage for a median-priced home with a 20% down payment.

On a national level, the average mortgage payment rose 6.3%, or $137, in the last 12 months to $2,303 in June and 1%, or $23, from last month, the NAR report found.

And though lower rates should help affordability, expectations of lower rates are keeping buyers and sellers in a wait-and-see mode.

"All eyes are on the Federal Reserve and the anticipated rate cut in September, and likely homebuyers may wait until mortgage rates drop further before buying," Molly Boesel, CoreLogic principal economist, wrote in a statement.