The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, reported an 18% annual gain in June, down from 19.9% in May. The 10-City Composite and 20-City Composite annual indices both posted increases lower than the previous month in June, at 17.4% and 18.6% year-over-year growth, respectively.
“Year-over-year deceleration in home price growth, like we saw in today’s home price report, needs to keep happening for the coming months,” says Zonda chief economist Ali Wolf. “The rapid rise in home prices over the past couple years combined with higher mortgage rates have pushed buyers to their limit. Slowing home price growth is critical for a more healthy and sustainable housing market.”
According to the index, Tampa, Florida (+35%), Miami (+33%), and Dallas (+28.2%) reported the highest year-over-year gains in home prices among the 20 cities analyzed in June. Only one of the 20 cities, Chicago, reported higher price increases in the year ending June 2022 compared with the year ending May 2022.
“Relative to May’s 19.9% gain (and April’s 20.6%), prices are clearly increasing at a slower rate,” says Craig Lazzara, managing director at S&P Dow Jones Indices. “This pattern is consistent with our 10-City Composite (up 17.4% in June vs. 19.1% in May) and our 20-City Composite (up 18.6% in June vs. 20.5% in May). It’s important to bear in mind that deceleration and decline are two entirely different things, and that prices are still rising at a robust clip.”
According to Lazzara, June’s growth rate for all three composite indices are “at or above the 95th percentile of historical experience.” The 10.6% year-to-date increase in the National Composite index is the fifth largest increase during the same period in the last 35 years.
Before seasonal adjustment, the U.S. National Index posted a 0.6% month-over-month increase in June, while the 10-City and 20-City Composites both posted increases of 0.4%. Thirteen cities reported price increases before and after seasonal adjustments on a month-over-month basis.
“We’ve noted previously that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that continued as our June data were gathered,” Lazzara says. “As the macroeconomic environment continues to be challenging, home prices may well continue to decelerate.”