United States: Home price gains moderate in June
Home prices growth continued to moderate in June, with the S&P/Case-Shiller 20-city composite home price index increasing 0.5% month-on-month, following May’s revised 0.8% increase (previously reported: +0.7% month-on-month). When adjusted for seasonal factors, house prices grew 0.1% from the previous month in June, undershooting May’s 0.2% print and missing market analysts’ expectations of 0.2%.
In annual terms, home prices rose 6.3% in June, moderating from May’s 6.5% increase. Weakness in selling prices for homes in the U.S. Northeast and Midwest offset double digits year-on-year gains in West Coast cities such as Las Vegas, San Francisco and Seattle, which recorded the fastest growth for the 22nd consecutive month. Meanwhile, Chicago, Washington and New York again registered the softest annual increases in prices.
House prices are expected to continue rising across the country in the months ahead due to ongoing housing shortages. However, while demand remains strong, recent data suggests supply could finally be catching up. According to David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, “even as home prices keep climbing, we are seeing signs that growth is easing in the housing market. […] Sales of both new and existing homes are roughly flat over the last six months amidst news stories of an increase in the number of homes for sale in some markets”. In addition, the combination of higher prices and rising mortgage rates is translating into declining affordability, weighing on demand.