Home Sales Fall to Their Lowest Level Since the GFC
Existing home sales in the U.S. fell in June to their lowest level since the 2007-2008 Great Financial Crisis and increases in home prices have continued to slow in many markets, according to the CoreLogic S&P Case-Schiller Index for May.
"While markets where inventories continue to hover below pre-pandemic levels saw home prices continue to rise, some markets with considerable inventory increases did see home prices starting to slip downward," CoreLogic reported. Sales have been hindered by high mortgage rates.
Though home prices appreciated in May for the 11th consecutive month, the report found the pace is slowing. "The CoreLogic S&P Case-Shiller Index slowed to a 5.9% year-over-year gain in May after peaking at 6.5% in both February and March of this year," it reported while predicting home prices would increase 5% on average in 2024.
Home prices rose by 0.9% nationally from April to May. "High-tier home prices were on average up at the fastest pace, by 1.1%, while the middle and low tiers were up 0.8%," with New York the leader in price appreciation in the middle and low tiers.
By region, monthly gains outpaced pre-pandemic trends in the Midwest. Housing markets have performed better in metro areas like New York and Chicago since mid-2022 as workers returned to cities and offices. However, some pandemic-era boomtowns that benefited from excessive price gains are now undergoing some cooling, as are Detroit and Tampa.
In May, CoreLogic reported, that price rises slowed in 16 out of 20 metros compared with April but continued their upward path in Las Vegas, Atlanta, and Denver. "New York, San Diego, Las Vegas, and Los Angeles continued to lead the 20-city index, with respective annual gains of 9.3%, 9.1%, 8.6%, and 8.4%. Twelve metros saw annual price gains higher than the national 5.9% increase," it noted.
In contrast, price growth in May decelerated sharply in Chicago, along with Cleveland, Dallas, and Portland, Oregon. However, no metro saw a price drop from April to May.
As the market awaits the Fed's hope for interest rate cuts in September, the report expects home sales to remain sluggish. It predicts markets that have seen less home-building will have different outcomes from those facing tax, insurance and maintenance costs – and that the outcome of the election could also affect the market.
Source: GlobeSt/ALM