While other outlets are talking about home price reignition, CoreLogic data could keep things in perspective. According to the real estate analytics company, annualized U.S. home price growth dropped to its lowest level in 11 years in May.
Monthly gains in CoreLogic’s Home Price Index (HPI) remain promising. May’s 0.9% increase, while down from 1.6% in March and 1.2% in April, continued a string of four straight months of positive growth. By and large, home prices remain on the upswing, having grown on a year-over-year basis at the national level for 134 consecutive months.
But yearly price growth remains modest, especially considering the rapid escalations seen over the past few years. May saw annual price growth of 3.1%, the lowest level of appreciation since the spring of 2012. And the factors pulling down prices on an annual basis are beginning to drag on short-term price dynamics as well.
“After peaking in the spring of 2022, annual home price deceleration continued in May,” said Selma Hepp, chief economist at CoreLogic. “Despite slowing year-over-year price growth, the recent momentum in monthly price gains continues in the face of recent mortgage rates increases.
“Nevertheless, following a cumulative increase of almost 4% in home prices between February and April of 2023, elevated mortgage rates and high home prices are putting pressure on potential buyers. These dynamics are cooling recent month-over-month home price growth, which began to taper and is returning to the pre-pandemic average, with an 0.9% increase from April to May.”
Home price fortunes are drastically divergent for different parts of the country. Metro areas in the South, Midwest and Southeast are logging annual price increases, but prices are still sinking in the West, where a lack of affordability continues to hamper upward home price movement.
Miami posted the largest yearly gain among metros tracked by CoreLogic, vastly outdistancing other metros with an increase of 11.8% from May 2022. Chicago (3.8%), Boston (0.5%) and Washington, D.C. (0.7%) saw much more subdued growth. On the flipside, prices are down over the past year in Western markets like San Diego (-2.5%), Los Angeles (-3.1%), Denver (-3.6%), Phoenix (-5.5%) and Las Vegas (-5.5%).
The same story bears out on the state level. In 12 states, prices slid year over year, with 10 of these states West of the Mississippi River and nine in the West Census region.
CoreLogic expects little change in price growth for June, projecting 1% appreciation during the month. The company also doesn’t see the ebbing of yearly price growth changing in the near term, although the outlook for next year appears considerably rosier. Per the CoreLogic HPI forecast, home prices will grow by 4.5% from May 2023 to May 2024.