According to CoreLogic S&P Case-Shiller Index, June saw an annual slowdown in home price growth. This marks the third consecutive month with a deceleration.
According to the report, home prices increased by 18% per year in June, compared with the 19.9% annual growth in May. The monthly change in home prices from May to June was 0.6%.
One expert said that the National Composite, which measures home prices, is still seeing significant gains, despite recent slowdowns.
Craig Lazzara (S&P Dow Jones Indices managing Director) stated in the report that “deceleration is not the same thing as decline” and that prices are still rising at an impressive rate. The National Composite has increased 10.6% in the first six months of 2022. Only four years in the past 35 years have seen such large increases.
Here is where home prices rose the most.
According to the Case-Shiller Index, the 10-City Composite index measures home price growth in the top 10 U.S. cities. It rose 17.4% annually in June from 19.1% in May. The 20-City Composite also saw a slowdown, with an 18.6% annual increase in June, compared to 20.5% annually for May.
The highest annual price increases in June were seen in Tampa, Miami, and Dallas. These cities had an average of 35%, 33%, and 28.2% respectively. Only one city reported a higher average annual price increase in June than in May.
Lazzara stated that “the market’s strength remains broadly based” and that all 20 cities experienced double-digit price rises for the twelve months ending in June. “However, in 19 of 20 cases, the June reading was lower than May’s. This is a result of regional deceleration.”
Expect home price growth to slow down
The Federal Reserve keeps raising interest rates to lower decades-high inflation. These higher rates are slowing down the housing market and bringing down prices.
Lazarra stated that “we’ve previously noted that mortgage financing has become more costly as the Federal Reserve raises interest rates. This process continued as our June data were collected.” “The macroeconomic environment is still challenging and home prices could well continue to decline,” Lazarra said.
The Fed raised interest rates by 75 basis points at its latest meeting. This brings the Fed’s target range for federal funds rates to 3%-3.25%. It is expected that it will continue to raise rates throughout 2022 and 2023.
CoreLogic’s Deputy Chief Economist Selma Shepp stated that “Housing market activity cooled significantly since June’s spike in mortgage rates, leading to a widespread slowing in home price growth and rising worries over possible home price declines in future,” she said in a statement. CoreLogic HPI Forecast June states that home prices will slow in most markets but not drop over the next year.