Home price growth failed to keep pace with inflation in August, eroding housing wealth for the fourth month in a row, according to data released Tuesday by S&P Dow Jones Indices.
The S&P Cotality Case-Shiller U.S. National Home Price NSA Index — better known as just the Case-Shiller index — registered a 1.5% annual gain in August, a slight decline from July’s 1.6% increase.
Meanwhile, inflation rose at a 2.9% annual pace in August, as measured by the consumer price index, meaning homeowners lost ground on their home investments in real terms during the month.
Nicholas Godec, head of fixed-income tradables and commodities at S&P Dow Jones Indices, noted in a press release that August’s tepid rise in single-family home prices marked “the weakest annual gain in over two years.”
“With price growth running at half the rate of inflation and several major markets in decline, the rapid appreciation of recent years has clearly ended,” Godec commented. “This adjustment may ultimately lead to a more sustainable market, but for now, homeowners are watching their real equity erode while buyers face the dual challenge of elevated prices and high borrowing costs.”
Home prices rose by 1.58% on a seasonally adjusted annual basis in the top 20 U.S. metro areas and by 2.15% in the 10 largest metros, according to separate Case-Shiller composite indexes.
The latest Case-Shiller data also show that 19 of the 20 largest metros saw month-over-month price declines in August before applying seasonal adjustments. Only Chicago eked out a meager 0.26% gain.
After adjusting for seasonality, nine of the top 20 metros were still in the red for the month, with Miami and Phoenix posting the largest monthly declines in home prices.
Looking at year-over-year data, Godec observed that Northeast and Midwest markets such as New York City, Chicago and Cleveland continue to outperform the broader market, while Sun Belt cities in Florida, Texas and Arizona have been lagging.
“Markets that experienced the sharpest pandemic-era gains are now seeing the largest corrections, while more affordable metros with stable local economies are holding up better,” Godec said. “Looking ahead, the housing market appears to be finding a new equilibrium after the pandemic boom.”
