New homes are being built in Tucson, Arizona.
Rebecca Noble | Bloomberg | Good pictures
According to the S&P CoreLogic Case-Shiller National Home Price Index, home prices in May were up 19.7% from the same month last year.
It marked a second month of slow gains as the housing market cooled due to higher mortgage rates and inflation concerns. In April, the year-on-year gain was 20.6%.
The 10-city composite rose 19% year-on-year, up from 19.6% in the previous month. The 20-city composite grew by 20.5%, up from 21.2% in April.
The cities of Tampa, Florida, Miami, and Dallas saw the strongest gains with year-over-year increases of 36.1%, 34%, and 30.8%, respectively. Four of the 20 cities reported higher price increases in the 12 months ending in May compared with the 12 months ending in April. As of February this year, all 20 cities in the survey were posting annual gains.
“Despite this decline, growth rates are still very strong, with all three composites historically at or above the 98th percentile,” S&P DJI managing director Craig Lazzara said in a release.
“We have already noted that mortgage financing has become more expensive as the Federal Reserve raises interest rates, a process that has been underway since our May data was collected. Accordingly, a more challenging macroeconomic environment will not support extraordinary home price growth. For a long time yet,” he added.
Mortgage rates have been rising steadily since January of this year, when the average rate for a 30-year fixed loan was 3%. It rose to more than 6% in June and has since hovered around 5.75%. Given the recent inflation of house prices, it has increased by 40% since inception Corona virus infection, the rapid rise in interest rates hit affordability hard. Potential buyers are sidelined.
“In the short term, transactions are feeling the pressure, with five consecutive months of home sales down. Additionally, with less competition, homes that left the market in a matter of hours last year are lingering,” said George Ratiu. , Manager of Economic Research at Realtor.com. “The share of homes seeing price reductions has doubled from a year ago as motivated homeowners look to close a deal before more buyers exit the market.”
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