US home prices increased last month at the slowest annual pace since August 2023, a development that could lure more prospective buyers back into the market, Redfin (RDFN) said Tuesday.

Prices grew 5.1% year over year in February, the real estate brokerage said. The annual growth has now slowed for 10 straight months, Redfin Senior Economist Sheharyar Bokhari said.

Month on month, prices rose 0.4% on a seasonally adjusted basis, marking the slowest rate since July.

"The recent decline in mortgage rates and slowing price growth is bringing more home hunters off the sidelines, an encouraging sign for potential sellers," Bokhari said.

Early this month, mortgage rates hit the lowest levels since December, Freddie Mac data showed.

Eight of the 50 most populous US metro areas tracked by Redfin saw annual declines in home prices last month, with seven of those in Florida and Texas. The biggest drop was recorded in Tampa, Florida, at 6%, followed by a 3.5% fall in Austin, Texas.

Detroit recorded the highest year-over-year gain of about 21%, followed by a 13% rise each in St. Louis and Pittsburgh, according to the report.

"Some areas of the country have turned into fully fledged buyer's markets, where homes are sitting longer and people are able to negotiate a good deal under the list price," Bokhari said. "That's particularly the case in several Florida and Texas markets where the number of homes on the market has ballooned and prices are now starting to fall."

On Tuesday, government data showed US housing starts jumped more than expected last month as single- and multi-family projects logged double-digit growth.

On Monday, real estate marketplace Zillow (Z, ZG) said US home values grew at the slowest pace in 18 months in February as competition among buyers eased with more listings hitting the market.