Home prices again appreciated year-over-year, although the rate continues to slow monthly, pointing again toward a normalization of the market through the coming months and in 2025.
The S&P CoreLogic Case-Shiller Home Price Index for June 2024 saw a 5.4% annual gain in home prices, down from the 5.9% annual gain last month. The 10-City Composite saw an annual increase of 7.4%, down from 7.8% last month, and the 20-City Composite saw a year-over-year increase of 6.5%, down from 6.9% last month.
Looking month-over-month, the upward trends of the U.S. National Index, 20-City Composite and 10-City Composite continued to decelerate from last month, with increases of 0.5%, 0.6% and 0.6%, respectively.
“The S&P CoreLogic Case-Shiller Indices continue to show above-trend real price performance when accounting for inflation,” said Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices. “While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index. That is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation.”
Realtor.com® Chief Economist Danielle Hale pointed out that home sales for the tracked months of this report (April, May and June) are usually busy, however “rising mortgage rates, which peaked in May, put a damper on the usual bustle, with existing-home sales slipping below 4 million pace in June, and slower activity put a lid on price growth.”
City wise, New York reported the highest annual gain among the 20 cities with a 9% increase in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively. Portland once again held the lowest rank for the smallest year-over-year growth, notching a 0.8% annual increase in June.
Luke noted that another strong theme of June’s data was “making housing more affordable to first-time homebuyers.”
“We compared each of the 16 markets that the S&P CoreLogic Case-Shiller Home Price Indices calculate on a tiered basis to evaluate historical performance of more affordable homes,” explained Luke. “Our tiered indices divide each market into three price tiers, which range based on the market. Looking at the last five years, 75% of the markets covered show low-price tiers rising faster than the overall market.”
Luke pointed to a few cities as examples: “The lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes. New York’s low tier has the largest five-year outperformance, rising nearly 20% above the overall New York region. New York also has the largest divergence between low- and high-tier prices. New York’s high-tier homes have lagged the region’s market by 5.1%. Conversely, San Diego has seen the largest appreciation in higher-tier homes over the past five years. While the overall San Diego market has risen by 72% in the past five years, the high tiers have done even better, rising 79% versus 63% for the lower tier.”
Looking toward the coming months (and the end of the year), CoreLogic Principal Economist Molly Boesel stated that home prices should see a moderate appreciation over the next few months as “all eyes are on the Federal Reserve and the anticipated rate cut in September, and likely homebuyers may wait until mortgage rates drop further before buying. Renewed home-buying demand could also give a boost to home prices.”
Hale agreed, adding that the Realtor.com 2024 forecast update projects home price growth of 4.6% for the year.
“Even though the number of homes on the market for sale trails 2017 to 2019 levels by 30%, the number of home sales has remained quite low,” Hale concluded. “In the face of sluggish demand, today’s low but quickly improving for-sale inventory has ushered in more market balance than would otherwise be expected, pushing up the share of sellers making price cuts according to Realtor.com data. This should help home prices maintain a slower pace of growth.”
