According to the latest S&P CoreLogic Case-Shiller National Home Price Index, home prices in the United States grew by 3.4% in May. This is the 14th consecutive month of slowing home-price growth. In addition, home prices in Seattle dropped 1.2% over the past 12 months, being the first of the 20 cities in the S&P CoreLogic Case-Shiller Index to lose value since 2012.
Average home price growth in the top 10 metropolitan areas increased by 2.2%, down from the previous month’s 2.3% increase. In addition, the top 20 metropolitan areas entered the 14th straight month of slowing price growth, posting a gain of 2.4% year over year, down from 2.5% in April. Thirteen of the top 20 metropolitan areas reported lower price increases compared to the previous month. This bucks the trend from April, when half of the top 20 saw an increase from the previous month.
Las Vegas (6.4%), Phoenix (5.7%) and Tampa, Florida (5.1%) accounted for the highest year-over-year price increases, while metros with the largest slowdown from the previous year continue to be in the Western area of the country: Seattle (14.8% point drop), San Francisco (9.9% point drop) and Las Vegas (6.2% point drop). What’s more, Seattle is also experiencing falling home prices with year-over-year declines of -1.2%. This is the first metro from the 20 Case-Shiller Index market to experience a decrease in home prices since December 2012.
Despite the cooldown entering its 14th month, observers of the housing market should ease their broader concerns of an imminent housing market correction. We see the cooldown flattening or even reversing course in the coming months, and expect the housing market to continue coming into balance. In the meantime, buyers are likely claiming some ground from what has otherwise been seller’s territory over the past few years. If mortgage rates stay low, wages continue to grow at about the same pace as home prices and inventory continues to tick up, we can expect the U.S. housing market to continue to stabilize throughout the remainder of the year.
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