The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 5.9% annual gain in May 2024. This is down from the 6.4% annual gain in April. The 10-City Composite Index had a 7.7% annual increase.
This is a decrease from the 8.1% increase in the previous month. The 20-City Composite Index posted a 6.8% year-over-year increase. In April, the increase was 7.3%.
New York had the highest annual gain among the 20 cities. It saw a 9.4% increase in May. San Diego and Las Vegas followed with annual increases of 9.1% and 8.6%.
U.S. house prices stayed flat in May, according to the FHFA House Price Index. However, they rose 5.7% year-over-year. The euro area economy has stayed steady despite challenges.
These include the COVID-19 pandemic, Russia’s gas shut-off, and the war in Ukraine. As the week begins, there are three key factors to watch:
1. Commodities and inflation resurgence
2.
Housing inventory levels and their impact on prices
3. The cooling of home prices in certain regions like the Sun Belt
Sellers are “losing their grip” on the housing market as prices cool. Higher inventory levels are starting to affect home prices.
This reverses a trend from the past few years. In June, U.S. housing inventory rose past 800,000, according to Realtor.com.
Home prices continue to cool
Many properties are going at least 30 days without a contract, per Redfin. “Another moderate 0.3% rise in house prices in May adds to the evidence that sellers are losing their grip on the market due to increasing supply,” said Thomas Ryan, an economist at Capital Economics. More inventory benefits buyers who have had limited options.
Home prices are already cooling in areas like the Sun Belt, where demand is weak. However, Capital Economics predicts a 5% increase in home prices through year-end. This is due to lower mortgage rates boosting demand.
“It will take until 2025, or even 2026, for the market to become better balanced, with price rises of 3% and 2.5% respectively,” Ryan added. The FHFA House Price Index remained unchanged in May. However, house prices rose 5.7% from May 2023 to May 2024.
The previously reported 0.2% price increase in April was revised to 0.3%. Seasonally adjusted monthly price changes from April to May ranged from -0.5% in the West North Central division to +0.3% in New England. The 12-month changes were all positive, ranging from +2.4% in the West South Central division to +9.2% in New England.
“The slowdown in U.S. house price appreciation continued in May amid a slight rise in both mortgage rates and housing inventory,” said Dr. Anju Vajja from FHFA. The FHFA HPI incorporates data from all 50 states and over 400 cities.
It offers insights at various geographic levels. FHFA uses a transparent methodology based on a weighted, repeat-sales statistical technique. It releases HPI data and reports quarterly and monthly.
The next HPI report will be released on August 27, 2024. It will include data for Q2 2024 and monthly data through June 2024.
