The weather may have heated up in June, but the housing market showed signs of cooling as the summer got underway. That was evident in the most recent CoreLogic/Case-Shiller Indices, which not only marked another month of decelerating price gains, but also saw price cuts in a handful of markets.
The index reported an 18% increase in home prices in June, down from May’s 19.9%. All 20 cities saw annual price growth as the 10- and 20-City Composites rose 18.6% and 17.4%, respectively. However, experts indicated that the June reading showed signs of the impact of deceleration at the regional level.
The strongest price growth was seen in the Southeast (+29.6%) and South (+29.3%) regions, as cities like Tampa, Miami and Dallas topped the list for June.
Tampa (+35%) was the fastest-growing city for the fourth consecutive month, with Miami (+33%) and Dallas (+28.2%) holding on to silver and bronze positions.
Decelerating price gains have been mounting in recent months as the market has shifted, but June’s index showed a newer development as a handful of housing markets actually saw price cuts.
Compared to May’s readings, home appreciation declined in Denver, Los Angeles, Portland, San Diego, San Francisco and Seattle.
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
“The deceleration in U.S. housing prices that we began to observe several months ago continued in June 2022, as the National Composite Index rose by 18% on a year-over-year basis,” said Craig J. Lazzara, managing director at S&P DJI. “Relative to May’s 19.9% gain (and April’s 20.6%), prices are clearly increasing at a slower rate.”
Lazzara added: “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. June’s growth rates for all three composites are at or above the 95th percentile of historical experience. For the first six months of 2022, in fact, the National Composite is up 10.6%. In the last 35 years, only four complete years have witnessed increases that large.
“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. As the macroeconomic environment continues to be challenging, home prices may well continue to decelerate,” Lazzara concluded.
“Today’s S&P CoreLogic Case Shiller Index spotlights a housing market that is losing steam as it moves through the peak summer months,” said George Ratiu, senior economist and manager of economic research at realtor.com®. “With home prices at new highs, inflation giving many workers an effective pay cut, and mortgage rates 250 basis points above last year’s levels, buyers are finding themselves hard-up against an affordability ceiling.
“With buyers running out of financial options, it is not surprising that sales of new and existing homes have been dropping in the first half of the year. Compared to trends we saw during the pandemic, when home shoppers’ fear of missing out on record-low mortgage rates fueled a feverish search for a safe haven, today’s housing market is experiencing a hangover of sorts.
“Looking at the road ahead, real estate markets are expected to continue sobering from the euphoria of the past two years that was induced by fiscal and monetary easing. The good news for buyers is that these shifts are tempering the relentless ascent of prices while the inventory of homes for sale continues to expand. With listed properties waiting longer for buyers’ offers, price cuts are growing in popularity nationwide and by 30% or more in many of the cities that were among the most attractive destinations for homebuyers during the pandemic—Las Vegas, Phoenix, Austin, Sacramento and Denver, to name a few.
“For sellers, it is clear that today’s housing market is changing rapidly, and striking the right price from the start could be key to a timely and successful transaction. The latest realtor.com® survey focused on sellers highlights that 92% of homeowners who sold this summer had to accept concessions in a changing market, a visible sign that buyers are regaining their bargaining power. A majority of today’s home shoppers are asking for home inspections and expecting to have necessary repairs made before closing. Moreover, price negotiations have returned to the market, a much-needed and welcome development on the road toward a new normal. Buyers who have been wondering if they will get a break during the last two years are looking upon a more promising horizon in the next few months,” concluded Ratiu.