If you need assistance, please call 754-581-5077

Home price growth reached point of sustained slowdown in May

Monday, August 1, 2022   /   by Dave Magua

Home price growth reached point of sustained slowdown in May

The forces fueling home price growth for the past two years have been weakening in recent months as the market finds itself in the midst of a multi-month slowdown.

Home prices rose by 1 percent in May after accounting for seasonal patterns, according to the S&P Corelogic Case-Shiller Index numbers released on Tuesday. Prices were up nearly 20 percent year over year.

By normal standards, this still represents a remarkably high rate of growth for the prices of U.S. homes. 

“Housing data for May 2022 continued strong, as price gains decelerated slightly from very high levels,” S&P Dow Jones Industrial Managing Director Craig Lazzara said in a statement.

But throughout the COVID-19 pandemic, conditions have been far from normal. Cheap mortgages in the first couple years of the pandemic helped drive up demand for homes — and the prices for which they would sell — to previously unseen levels. 

Since the start of the year, however, mortgage rates have climbed from around 3 percent to well over 5 percent. And after posting its second consecutive month of decline in price increases, the housing market in May reached its lowest rate of price growth since July 2020, by Case-Shiller’s measure.

“We’ve noted previously that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that was ongoing as our May data were gathered,” Lazzara said in the report. “Accordingly, a more-challenging macroeconomic environment may not support extraordinary home price growth for much longer.”

Another measure of home price growth released Tuesday painted a similar picture. Prices rose by 1.4 percent in May on a seasonally adjusted basis, and were up 18 percent year over year, according to the Federal Housing Finance Agency House Price Index. 

This FHFA estimate caps three consecutive months of slowdowns in price growth since the 1.9 percent monthly increase observed in February.

??“House prices continued to rise in May, but at a slower pace,” FHFA supervisory economist Will Doerner said in the HPI report. “Since peaking in February, price appreciation has moderated slightly. Price growth continues to remain above historical levels, supported by the low inventory of properties for sale.”

Despite this slowdown, prices have so far proven more resilient in the face of this higher-rate environment than other measures of home market activity. 

The number of homes sold, general residential construction activity, and the extremely seller-friendly bargaining conditions in previous months have all been eroding quickly, even as the ultimate sale price of a typical home has continued to climb.

But in some parts of the country, the price-growth party appears to be already over.

Throughout the Pacific region, monthly price growth in May slowed to 0.2 percent, according to FHFA’s measure. That’s the equivalent of the national price increases that were occurring in April 2020, before the home market’s stunning surge kicked in after the initial shutdown-induced shock at the beginning of the pandemic.

  #real estate #south florida #luxury real estate #buy and sell #dave magua #home decor #real estate agent #luxury life #luxury homes # miami realtor #dave magua group #we sell houses #jplantation #weston island #beach front properties #real estate investor #investment property #family home #boca raton #boca #home #illustrated #real estate#compass, palm beach county, south florida, broward county, sell my property, mortgage, sell my house, jupiter, palm beach, jupiter farms, property insurance

Keyes Illustrated Properties
Dave Magua
21065 Powerline Rd C-7
Boca Raton, FL 33433

The multiple listing information is provided by MIAMI Association of Realtors® from a copyrighted compilation of listings. The compilation of listings and each individual listingare © 2018 MIAMI Association of Realtors®. All Rights Reserved.
The information provided is for consumers’ personal, noncommercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. All properties are subject to prior sale or withdrawal. All information provided is deemed reliable but is not guaranteed accurate, and should be independently verified.
UP5DB701E1507748.jpg All listings featuring the BMLS logo are provided by BeachesMLS, Inc. This information is not verified for authenticity or accuracy and is not guaranteed. Copyright ©2024 BeachesMLS, Inc.
This site powered by CINC: www.cincpro.com