A slight autumn chill has fallen over the housing market, and after an incredibly hot past few years, it’s probably fair to say the cooldown is a welcome development for many would-be home buyers.
The U.S. National S&P CoreLogic Case-Shiller Home Price Index — which tracks home prices — rose 6 percent in July from a year earlier, a modest slowdown from its 6.2 percent year-over-year climb in June and just 0.1 percentage points below Zillow’s forecast from a month ago.
The slowdown was even more pronounced in the firm’s 20-city index, which gained 5.9 percent annually in July, down from its 6.4 percent annual growth in June. The 10-city index slowed as well, to 5.5 percent annually in July from 6 percent in June. Only three cities logged double-digit annual gains: Las Vegas at 13.7 percent, Seattle at 12.1 percent and San Francisco at 10.8 percent.
Home value growth slowing to merely an “above average” pace could give beleaguered buyers a chance to catch their breath. Until recently, home values in many of the nation’s largest and hottest housing markets had been growing at double-digit annual rates — which can make saving for a down payment feel like trying to hit a rapidly moving target.
At the same time, the number of homes for sale — while still falling in many markets — has begun to decline less quickly, and is even creeping back up in some places. Inventory is crawling back from incredibly low levels, and supply remains exceptionally tight for the most affordable homes.
Rent growth also has cooled considerably, which means some renters may feel less pressure to become homeowners in order to stabilize their monthly costs, which may lessen competition among buyers currently on the market.
Seasons, just like the housing market, change slowly as environmental conditions shift. Winter in the housing market is certainly not here yet, but it’s increasingly clear that the end of the hot season is rapidly approaching.
Zillow forecasts a further annual slowdown in August, of 5.7 percent. Those Case-Shiller results will be available on Tuesday, Oct. 30.
Note: Case-Shiller and Case-Shiller Index are registered trademarks of CoreLogic Solutions, LLC. The statements herein are not endorsed by or provided in association or connection with CoreLogic, LLC.