Another month, another all-time high for home prices.
The S&P CoreLogic Case-Shiller Home Price Index for May jumped by 5.9% year over year, the third month in a row that the index has posted a new record. While the pace of annualized growth dropped slightly compared to April, the year-to-date growth of the index sits at 4.1%, the fastest start in two years.
“Home prices typically decline over the course of the second half of the year, but we may see a notably steeper seasonal decline this year,” Bright MLS chief economist Lisa Sturtevant said in a statement. “The main reason home prices will moderate is an increase in supply. At the end of May, the inventory of existing homes was up by nearly 20% compared to a year ago. New home inventory hit its highest level since 2008.”
S&P’s 10-city and 20-city composite indices outpaced the yearly growth at the national level at 7.7% and 6.8%, respectively. This suggests that larger markets are a driver of gains at the national level.
For the six months prior to May, San Diego posted the highest annualized gain among the markets in the 20-city composite, and it posted a yearly gain of 9.1% in May. But New York‘s 9.4% jump was highest movement in May, with Las Vegas (8.6%), Los Angeles (8.4%) and Miami (7.6%) also leading the way for year-over-year gains.
At the opposite end are cities where multiple reports show a softening of the market. Portland, Oregon, tallied the lowest annualized growth among the markets in the 20-city composite with a 1% gain. Other metro areas with relatively subdued growth were Denver (2.1%), Minneapolis (2.4%) and Dallas (2.6%). Tampa, which has experienced a recent flood of new supply, posted a 3.3% annual gain in May.
Another notable item in the report is that the pace of annual growth has slowed across the three indices. Nationally, the 5.9% year-over-year gain in May was down from 6.4% in April. The 20-city composite fell from 7.3% in April to 6.8% in May, while the 10-city composite dropped from 8.1% in April to 7.7% in May.
But Brian Luke, S&P Global’s head of commodities, warned against reading too much into this.
“While annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging,” Luke said in a statement.
