May marked the first month of the year (in several years) where interest rates floated above 5%, and the elevated rates helped to noticeably pull back price growth as affordability continues to wear on homebuyers. Annual price growth decelerated in May, now below 20%, continuing the trend down from the peak that began in April and is likely to continue as affordability challenges persist.
The national Case-Shiller Home Price Index rose 19.7% year-over-year in May, a slowdown from 20.6% in April. Annual appreciation also slowed in both the 10- and 20-city (non-seasonally adjusted) indices. The annual gain in the 10-city index fell from 19.6% in April to 19% in May, and for the 20-city composite index from 21.2% to 20.5%. From April to May, the national index (seasonally adjusted) rose 1%, while the 10- and 20-city indices were each up 1.3%.
| ZILLOW FORECAST, RELEASED 6/30/22 | ACTUAL CASE-SHILLER INDICES, RELEASED 7/26/22 |
|
|---|---|---|
| 10-City Composite, Month-Over-Month (SA) |
1.6% | 1.3% |
| 10-City Composite, Year-Over-Year (NSA) |
18.9% | 19.0% |
| 20-City Composite, Month-Over-Month (SA) |
1.7% | 1.3% |
| 20-City Composite, Year-Over-Year (NSA) |
20.3% | 20.5% |
| U.S. National Month-Over-Month (SA) |
1.5% | 1.0% |
| U.S. National Year-Over-Year (NSA) |
19.5% | 19.7% |
Slowing price growth is a reflection of changing tides in the housing market. Sales volume has slumped, inventory is on the rise and homes are spending more time on the market. But despite these shifting waters, a truly balanced market may still be over the horizon. Homebuilders are scaling back their activity, opting to finish the projects they’ve begun rather than take on new ones. And the demographic forces that helped propel demand in recent years remain in place, keeping some upward pressure on prices in the longer-term. For now, though, the housing market is undergoing a sea change that appears to have rendered the days of historic price growth as a thing of the past.
Annual home price growth as reported by Case-Shiller are expected to slow in all three indices. Monthly appreciation in June is expected to accelerate. S&P Dow Jones Indices is expected to release data for the June S&P CoreLogic Case-Shiller Indices on Tuesday, August 30.
| INDEX | ACTUAL May CASE-SHILLER CHANGE |
ZILLOW’S FORECAST FOR THE CASE-SHILLER June INDICES |
|---|---|---|
| 10-City Composite, Month-Over-Month (SA) |
1.3% | 1.1% |
| 10-City Composite, Year-Over-Year (NSA) |
19.0% | 18.0% |
| 20-City Composite, Month-Over-Month (SA) |
1.3% | 1.2% |
| 20-City Composite, Year-Over-Year (NSA) |
20.5% | 19.4% |
| U.S. National Month-Over-Month (SA) |
1.0% | 1.0% |
| U.S. National Year-Over-Year (NSA) |
19.7% | 18.4% |
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.