As the housing market shifted under the weight of elevated mortgage rates and inflation in April, the most recent S&P CoreLogic/Case-Shiller Indices show that price growth for single-family homes in the U.S. experienced a mild deceleration.
The organization revealed that home prices climbed 20.4% YoY in April, slightly down from March’s 20.6%. All 20 cities saw annual price growth as the 10- and 20-City Composites rose 19.7% and 21.2%, respectively.
Experts attributed the moderation in price growth partly to the impacts of mortgage rates, which crossed the 5% threshold in April amid elevated inflation levels not seen since the 1980s.
Tampa led the way with a 35.8% increase in home prices. Miami and Phoenix followed, with prices jumping 33.3% and 31.3%, respectively.
The complete data for the 20 markets measured by S&P:
Charlotte, North Carolina
Las Vegas, Nevada
Los Angeles, California
New York, New York
San Diego, California
San Francisco, California
“April 2022 showed initial—although inconsistent—signs of a deceleration in the growth rate of U.S. home prices. We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April,” said Craig J. Lazzara, Managing Director at S&P DJI. “We noted last month that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that had only just begun when April data were gathered. A more-challenging macroeconomic environment may not support extraordinary home price growth for much longer.”
Lazzara added: “April’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them. In contrast with the past five months, when prices in most cities accelerated, in April, only nine cities saw prices rise faster than they had done in March. There’s a regional pattern among the nine, as all five cities in our South composite (Atlanta, Charlotte, Dallas, Miami and Tampa) are represented there.”
“Today’s S&P CoreLogic Case Shiller Index spotlights shifting dynamics in a housing market landscape feeling the pressure of rising mortgage rates in April,” said George Ratiu, senior economist and manager of economic research, realtor.com®. “The month saw rates crest the 5% threshold for the first time since April 2010, driving the cost of borrowing over 50% higher than the prior year. For buyers, the higher costs led to smaller budgets and resulted in fewer transactions. However, the small number of homes for sale kept pressure on prices, driving them 20.4% higher compared with a year ago.
“With the index looking at real estate markets in the rearview mirror, the fast-paced changes of the last two months are partly obscured. Mortgage rates, which averaged 5.1% in the last week of April, advanced near 6% in June, pushing the typical monthly payment $800 higher than in 2021. In addition, spurred by record-high asking prices and the desire to move beyond pandemic constraints, growing numbers of homeowners are selling their homes. These changes are resulting in cooling demand matched by growing inventory, a welcome downshift in competitive conditions for housing markets that seemed stuck in the fast lane for two years. Homes are spending more time on the market waiting for an offer, and the share of homes with price cuts is rising. For buyers and sellers, the road ahead will require more flexibility in pricing, brushing up on negotiation skills and acknowledging that market conditions today are different than even six months ago,” concluded Ratiu.