United States: Home prices ease slightly in May
Home prices moderated in May, with the S&P/Case-Shiller 20-city composite home price index increasing 0.7% month-on-month, following April’s revised 0.9% increase (previously reported: +0.8% month-on-month). The print fell short of market expectations of a 0.8% rise. When adjusted for seasonal factors, house prices grew 0.2% from the previous month in May, matching April’s print.
In annual terms, home prices rose 6.5% in May, easing slightly from April’s revised 6.7% increase (previously reported: +6.6% year-on-year). West Coast cities continued to drive the expansion, with Las Vegas, San Francisco and Seattle—which recorded the fastest growth for the twenty-first consecutive month—sustaining double-digit price growth. Chicago and Washington, meanwhile, once again registered the softest annual increases in prices.
House prices are expected to continue rising across the country in the months ahead, pushed higher by housing shortages. However, while demand remains strong, recent data suggests it could be weakening. Both existing and new home sales slipped in June, and mortgage applications have been falling steadily: The combination of higher prices and rising mortgage rates is translating into declining affordability, and thus weighing on demand.