The market is continuing its balancing act, with two leading home price indices reporting a two-year low in home price growth on Thursday.
The Federal Housing Finance Agency Home Price Index (FHFA HPI) increased 2.8 percent year-over-year in May, while the S&P Corelogic Case-Shiller Index (CSI) increased 2.3 percent. On a monthly basis, both indices posted decreases of 0.2 percent and 0.4 percent, respectively.
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Nicolas Godec | Credit: S&P Global
“May’s data continued the year’s slow unwind of price momentum, with annual gains narrowing for a fourth consecutive month,” Nicholas Godec, head of fixed income tradeables and commodities at S&P Dow Jones Indices, said in a statement.
“National home prices were just 2.3 percent higher than a year ago, the smallest increase since July 2023, and nearly all of that gain occurred in the most recent six months. The spring market lifted prices modestly, but not enough to suggest sustained acceleration.”
According to the FHFA HPI, regional seasonally adjusted monthly home price changes ranged from -0.8 percent in the Middle Atlantic division to +0.3 percent in the West South Central and New England divisions. Meanwhile, all regions experienced growth on an annual basis, reaching as high as +5.9 percent in the Middle Atlantic division.
The Case-Shiller City Composites followed a similar trend of monthly declines and annual growth, with the 10-City Composite posting an annual increase of 3.4 percent and the 20-City Composite logging an annual increase of 2.8 percent. Both composites decreased by 0.7 percent and 0.6 percent, respectively, in April.
Among the 20 cities, New York City had the greatest increase for the second consecutive month (+7.4 percent), followed by Chicago (+6.1 percent) and Detroit (+4.9 percent).
Dr. Lisa Sturtevant
Bright MLS Chief Economist Lisa Sturtevant said the Case-Shiller Index “provides additional evidence of the transitioning housing market.”
“Buyers have been holding back amidst elevated mortgage rates and economic uncertainty,” she said in an emailed statement. “At the same time, supply is growing, with the inventory of homes for sale higher than pre-pandemic levels in some markets. As a result, the fast pace of home price appreciation has stalled and, in some markets, home prices are beginning to fall.”
Sturtevant said the index shows greater flexibility for homebuyers in the coming months; however, we’re still far from being in a buyers’ market.
“Although home price growth is slowing and home prices likely will fall year-over-year in some markets this fall, unfortunately for buyers these trends will not make much of a dent in the affordability challenge,” she said. “It is no longer a seller’s market in many places, but that doesn’t mean it is a buyer’s market or even a balanced market.”
“The housing market is stuck, with both prospective buyers and sellers increasingly concerned about the economy and their own personal financial situations,” she added. “Home sales activity is likely to remain slow in the second half of the year and overall sales could end the year at or below last year’s historically low levels.”
