The S&P CoreLogic Case-Shiller Index and FHFA House Price Index showed “no relief” for homebuyers hoping for falling home prices as mortgage rates remain elevated.
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Home prices showed decent annual gains in May, according to the S&P CoreLogic Case-Shiller Index, as the Federal Housing Finance Agency (FHFA)’s House Price Index remained flat from the previous month, reports released on Tuesday show.
The S&P CoreLogic Case-Shiller National Home Price NSA Index, showed a 5.9 percent annual gain in May, down from 6.4 percent the previous month. On a month over month basis, the National Index showed the same 0.3 percent change as during the previous month.
Meanwhile, the 10-City Composite, which represents the 10 largest cities in the nation, saw an annual increase of 7.7 percent, down from 8.1 percent in April. That index also saw a monthly change of 0.3 percent from the previous month.
The 20-City Composite, representing the largest cities in the country, posted an annual gain of 6.8 percent, down from 7.3 percent the month before. The index saw a monthly change of 0.4 percent from April.
“While annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging,” Brian D. Luke, head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, said in a statement.
“Our home price index has appreciated 4.1 percent year-to-date, the fastest start in two years. Covering the six-month period dating to when mortgage rates peaked, our national index has risen the past four months, erasing the stall experienced late last year. Collectively, all 20 markets covered continue to trade in a homogeneous pattern. Coming into the 2024 presidential election, traditional red states are in a dead heat with blue states, both averaging 5.9 percent gains annually.”
Meanwhile, the FHFA HPI showed that home prices rose 5.7 percent on an annual basis between May 2023 and May 2024, and flat from the previous month.
Across the nine census divisions, the West North Central division showed the lowest price growth, declining by 0.5 percent on a monthly basis. The New England division saw the greatest gains, with the seasonally adjusted price growing by 0.3 percent month over month. On an annual basis, all divisions saw positive growth, with New England once again leading the charge with a gain of 9.2 percent.
“U.S. home price movement was flat in May,” Dr. Anju Vajja, deputy director for FHFA’s division of Research and Statistics, said in a statement. “The slowdown in U.S. house price appreciation continued in May amid a slight rise in both mortgage rates and housing inventory.”
Rates on 30-year fixed-rate conforming mortgages averaged 6.70 percent on Monday, down from a 2024 high of 7.27 percent registered April 25 and the lowest rate since March 10, according to rate lock data from Optimal Blue. Rates on jumbo mortgages exceeding Fannie Mae and Freddie Mac’s $766,550 conforming loan limit averaged 7.01 percent, down from the 2024 high of 7.56 percent on April 15.
As inflation continues to inch closer to 2 percent, economists predict rates rates for conforming mortgages will continue to drop into the low 6s by the end of next year and home price appreciation will cool.
For the time being, however, homebuyers must continue to struggle with high costs associated with owning a home.
“There’s no relief for homebuyers hoping for flattening or falling prices,” Robert Frick, corporate economist with Navy Federal Credit Union, said in a statement sent to Inman. “The Index is re-accelerating after slowing due to higher mortgage rates late last year, and is showing a strong 4.1 percent price increase so far this year. This gives a preview of what’s likely to happen if mortgage rates fall even more later this year. Expect home prices to rise as lower mortgage rates encourage more buyers to enter the market, bidding up prices for the low home supplies available.”
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