CoreLogic’s latest Home Price Insights (HPI) report revealed that home prices nationwide, including distressed sales, rose 20.2% year over year in May — a still-strong annual jump, but one that’s likely to precede a period of slowing price growth.
Month over month, prices grew 1.8%. May’s year-over-year price increase represented a slight dip from April’s figure, although it remained at a double-digit percentage for the 16th consecutive month.
Every state, along with the District of Columbia, registered a yearly gain; 13 states saw a gain of over 20%. Sun Belt states continued to see the highest annual increases, led Florida, where prices were up 33.2% from May 2021; Tennessee, where prices rose 27.4%; and Arizona, where prices increased 27.3%.
Warmer cities in the South and Southwest likewise led metros tracked by CoreLogic in yearly price growth, topped by Phoenix at 28.7%, Las Vegas at 26.5% and San Diego at 24.5%.
CoreLogic expects annual price growth to slow drastically moving forward, with the company projecting a year-over-year gain of just 5.0% by May 2023.
“Slowing home price growth reflects the dampening consequence of higher mortgage rates on housing demand, which was the intention,” explained Selma Hepp, deputy chief economist at CoreLogic. “With monthly mortgage expenses up about 50% from only a few months ago, fewer buyers are now competing for continually limited inventory. And while annual home price growth still exceeds 20%, we expect to see a rapid deceleration in the rate of growth over the coming year.
“Nevertheless, the normalization of overheated buying conditions should bring about more of a balance between buyers and sellers and a healthier overall housing market.”