Marking the eleventh consecutive month of annual appreciation, but the second consecutive month of slowing gains, home prices hit new highs on the CoreLogic S&P Case-Shiller Index in May, rising 5.9% from the year before.
The non-seasonally adjusted, month-over-month index also reflected a slower rate of growth, up by 0.9% from April, which is below the 1% average May increase recorded between 2015 and 2019. Overall, home prices in May were 5% higher than their June 2022 peak, per the Index.
“The slowing of yearly gains continues to reflect a residual comparison with the strong 2023 spring season, while also illustrating the impact of slowing housing demand on cooling price growth,” said CoreLogic Chief Economist Dr. Selma Hepp.
Existing-home sales fell 2.8% annually in May and 5.4% annually in June, per the National Association of Realtors (NAR). Existing-home sales in June sat 23.7% below June 2022 levels.
“The housing market experienced considerable cooling at the end of the spring home-buying season as mortgage rates pushed beyond the 7% benchmark - which seems to be a mental barrier for potential homebuyers in deciding to enter the home-buying process,” Hepp added.
The Index notes that some markets where new listings have risen fastest have experienced not just moderating price growth, but home prices starting to slip. Though still down by nearly one-third from 2017 and 2019 levels, housing inventory rose 36.7% in June, helping buyers.
New York, San Diego, Las Vegas, and Los Angeles continued to lead the 20-city index, with respective annual gains of 9.3%, 9.1%, 8.6%, and 8.4%. Twelve metros saw annual price gains higher than the national 5.9% increase.
Cleveland, Detroit, and Seattle posted the nation’s largest monthly gains from April to May, rising 1.8%, 1.7%, and 1.4%, respectively. While no metro recorded a month-over-month decline in home prices in May, Portland, Phoenix, and Boston experienced the slowest gains.
Among markets in the 20-city index, pandemic-era boomtowns are continuing to see price resets following excessive gains, the report notes, and markets including Detroit and Tampa, which had strong appreciation over the last year, continue to cool.
As home price appreciation continues to cool, high-tier priced homes are holding the most momentum, on average up by 1.1% annually in June, while the middle and low tiers were up just 0.8%. The expectation of Autumn rate cuts will likely cause home sales activity to remain sluggish throughout the summer, the report projects, with easing rates boosting home prices.
“High-tier homes continued to see relatively more appreciation as higher-income buyers’ budgets are relatively more shielded from high mortgage rates,” commented Hepp.
