The CoreLogic S&P Case-Shiller Index, which tracks home prices across the country, downshifted again in June, slowing to an annual increase of 5.4%.
That makes June the 12th consecutive month with a year-over-year gain, bringing home prices to new record highs. But after peaking at 6.5% annual growth in both February and March, the market has settled into a period of slowing price increases as sales continue to lag and inventory sees some steady incremental growth.
On a non-seasonally adjusted basis, the national index also slowed month over month, growing 0.5% in June. That’s below the average June increase of 0.8% between 2015 and 2019 and is down from the 1% monthly pickup in June last year.
“Home price appreciation should remain moderate in 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,” said Molly Boesel, principal economist at CoreLogic. “Renewed home buying demand could also give a boost to home prices.”
The United States’ largest cities continue to see similar price deceleration as the rest of the country at large. The S&P CoreLogic Case-Shiller 10-City Composite saw an annual increase of 7.4% in June, down from a 7.8% yearly pickup during the previous month. The 20-City Composite logged a year-over-year gain of 6.5%, dropping from a 6.9% increase in May.
Among the 20 cities tracked by the indices, New York saw the highest annual bump, posting a 9.0% increase in June. The Big Apple was followed by San Diego and Las Vegas, which saw annual increases of 8.7% and 8.5%, respectively. Portland, Oregon, again saw the lowest year-over-year increase, up 0.8%.
Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices, noted that more affordable homes are seeing stronger price gains compared to the rest of the market, though the comparison varies from city to city.
“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,” he explained. “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. For example, 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.”
