Home prices have reached yet another all-time high, but the pace of growth is slowing. That’s according to the S&P CoreLogic Case-Shiller Index for July, which shows U.S. home prices rising 5% year over year. Growth in major U.S. cities was even higher, as the 10-city composite index was up 6.8% year over year and the 20-city composite index was up 5.9%.
It’s the 14th consecutive month that the index hit a record high.
“We expect the rate of home price growth to continue to slow over the next few months before reaccelerating amidst falling interest rates,” Realtor.com senior economist Ralph McLaughlin said in a statement.
“However, with mortgage rates falling to 24-month lows and a high probability of further rate reductions, there is a significant chance that the rate of home price growth will bottom out over the next months and then reaccelerate at the end of the year or at the beginning of next [year].”
While home prices rose at a healthy clip in July, these numbers represent a deceleration of growth and the lowest annualized rate of 2024. In June, the national index rose 5.5% year over year, and the 20-city composite (6.5%) and 10-city composite (7.4%) also posted higher growth rates in June than in July.
The slower pace of growth comes at a time when housing markets across the country have stalled due to tanking home sales. According to the National Association of Realtors (NAR), existing home sales in August fell 2.5% compared to July and were down 4.2% year over year.
“Now that mortgage rates are falling and buyers seem to be jumping back into the market, where will home prices go this fall?” Bright MLS chief economist Lisa Sturtevant asked. “Conventional wisdom is that lower mortgage rates lead to faster home price growth, but conventional wisdom hasn’t been holding true in this unusual market.”
According to Brian Luke, the head of commodities, real and digital assets at S&P Dow Jones Indices, home-price growth is outpacing long-run averages and lower price tiers are outperforming over three- and five-year timelines.
Regionally, the Northeast is experiencing the most growth as the area hit another all-time high, as did the Midwest. The South had the slowest pace of growth.
New York (up 8.8% year over year) continues to outpace all cities in the 20-city composite index, followed by Las Vegas and Los Angeles. Portland, Oregon, posted the slowest price growth of these markets at 0.8%.
