Housing market ‘weakening sharply’ from April’s peak, led by Seattle, San Francisco and San Diego
The numbers: The S&P CoreLogic Case-Shiller 20-city house price index rise slowed to 18.6% year-over-year in June down from 20.5% in the previous month.
In the month of June, the 20-city index rose a seasonally adjusted 0.4%, down from 1.3% in May.
The rate of price rises has sharply slowed since reaching a peak of 21.2% in April.
A broader measure of home prices, the national index, rose a seasonally adjusted 0.3% in June from May. June’s monthly increase was the lowest in two years.
A separate report from the Federal Housing Finance Agency showed a 0.1% monthly gain from May to June. And over the last year, the FHFA index was up 17.7%
Key details: Tampa, Miami, and Dallas reported the highest year-over-year gains among the 20 cities in June. Price growth was strongest in the South and Southeast, which saw an increase of over 29%.
Cleveland, Minneapolis, and Washington D.C. reported the lowest year-over-year gains, though these cities still saw home prices grow.
No cities reported price declines.
Big picture: Economists and real-estate companies have stressed that price growth has decelerated considerably.
And in pandemic boomtowns, an increasing number of houses listed on the market are even seeing their prices being slashed.
Part of it is due to buyer reluctance to jump in as mortgage rates trend higher. The average on the 30-year fixed-rate was at 5.55% last Thursday, according to Freddie Mac. Last year around the same time, that rate was at 2.68%.
The market’s also affected by economic uncertainty, with buyers looking to wait and sellers hoping to sell before demand falls further.
| Cities | Change from May to June |
| Seattle | -1.90% |
| San Francisco | -1.30% |
| San Diego | -0.70% |
| Los Angeles | -0.40% |
| Portland | -0.10% |
| Denver | -0.10% |
| Washington | 0% |
| Boston | 0.60% |
| Minneapolis | 0.70% |
| Detroit | 0.90% |
| Dallas | 1% |
| Phoenix | 1% |
| New York | 1.10% |
| Cleveland | 1.20% |
| Atlanta | 1.30% |
| Las Vegas | 1.50% |
| Charlotte | 1.80% |
| Chicago | 1.80% |
| Tampa | 2.20% |
| Miami | 2.30% |
| Composite-20 | 0.40% |
What the producers of the report said: “Prices are clearly increasing at a slower rate,” Craig J. Lazzara, managing director at S&P DJI, but “it’s important to bear in mind that deceleration and decline are two entirely different things, and that prices are still rising at a robust clip.”
Lazzara said that the growth rate in June was at or above the 95th percentile of how prices have risen in the past.
S&P stressed that prices were still rising at a robust clip. Over the first half of the year, prices have grown 10.6% nationally. In the last 35 years, that rate of growth was achieved only over four years, the company said.
At a national level, “markets in the West, including Seattle, California coastal metros, Portland and Denver, saw most notable waning of home prices growth in June,” Selma Hepp, deputy chief economist at CoreLogic, said in a statement.
CoreLogic expects home prices to continue to slow, but not decline in most markets, over the next year.
What outside economists said: “Home prices came in well below expectations in June,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note.
“While a move in the right direction, year-on-year gains remain elevated. Higher mortgage rates, still-low supply and elevated prices continue to be constraints for buyers,” she added. “Prices should continue to ease on weaker demand and gradually easing supply going forward.”
What other economists are saying? “The housing sector is weakening sharply,” Stephen Stanley, chief economist at Amherst Pierpont, wrote in a note. “June is the first month that the official price data began to show the shift to cooler demand for homes.”
Market reaction: Stocks
DJIA,
SPX,
are set to open higher on Tuesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
slipped slightly.
