US home price growth eases in May from record high: Case-Shiller

Numbers: The S&P CoreLogic Case-Shiller 20-city index slowed to 20.5% year-over-year in May, down from 21.2% the previous month.

In May, the index of 20 cities rose by a seasonally adjusted 1.3%, down from 1.7% in April.

Standard & Poor’s said annual growth in May was the second-highest for its 20-city index. April’s gain was the peak.

A separate report from the Federal Housing Finance Agency showed a monthly gain of 1.4%. And over the past year, the FHFA is up 18.3%.

Key details: Tampa, Miami, and Dallas posted the highest annual gains among the 20 cities in May. The strongest price growth was in the South and Southeast, which saw 30.7% growth.

Minneapolis, Chicago, and D.C. posted the lowest gains year-over-year, although these cities still saw home price growth.

No city recorded a drop in prices.

The Big Picture: Economists believe that the moderation in housing price growth is the beginning of a new trend.

Housing affordability has fallen to a 15-year low, which should begin to “constrain the acceleration in home prices,” Lou Crandall, chief economist at Wrightson ICAP, wrote in a note before the data was released.

The cost of borrowing has increased significantly since last year, with a 30-year average flat rate of 5.54%, according to Freddie Mac. Last year around the same time, that rate was 2.78%.

What the report producers saidThere has already been evidence of a slowdown, said Craig J. Lazzara, managing director of S&P DJI. Price gains for May exceeded those for April in just four cities. In a note accompanying the data, Lazarra said that in February of this year, all 20 cities were accelerating.

Lazarra also warned that a more “challenging” environment “may not support exceptional house price growth for much longer”.

What the outside economists said: “In short, house prices rose less than expected in May… The slowdown in the monthly and annual pace is a move in the right direction,” Rubeela Farooqi, chief US economist at High Frequency Economics, wrote in a note. “We expect a combination of higher mortgage rates – which affect affordability and impacts demand – and supply relief should help relieve pressure on prices over time.”

market reaction: DJIA stock,
-0.60%

SPX,
-1.11%
set to open lower on Tuesday in the wake of Walmart’s WMT,
-8.20%
Profit warning. 10-year Treasury yield TMUBMUSD10Y,
2.757%
It decreased to 2.744%.

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