US CoreLogic S&P Case-Shiller Index Growth Slows Again, Up 5.9% Annually in May

Affordability in the Midwest helped boost overall home price growth; other markets saw most appreciation in high-tier price segment

Mortgage rates pushing past 7% has seemed to pose a barrier to potential homebuyers. The influence that these higher rates have on delaying the decision to purchase a home was seen at the end of the spring homebuying season when the housing market experienced considerable cooling.

In June, existing home sales activity, which was saddled with high April mortgage rates, slowed to the lowest pace since the Great Financial Crisis. Although sales struggled, home prices remained relatively constant in most of the markets despite more inventory of for-sale homes.

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.  

May marked the eleventh straight month of annual appreciation (Figure 1). Home prices continued to hit new highs and were up by 5% when compared with the June 2022 peak. However, the market has begun to put the brakes on growth.

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.

The moderation of yearly gains contrasts with the strong 2023 spring season and illustrates the impact of slowing housing demand on cooling price growth. Still, the latest CoreLogic Home Price Index report forecasts home prices to increase 5% on average in 2024.

The non-seasonally adjusted, month-over-month index continued to show a solid but slowing seasonal increase. The index was up by 0.9%, which is below the 1% average May increase recorded between 2015 and 2019 (Figure 2) and is notably below the monthly gains seen in May since 2021.

The 10-city and 20-city composite indexes also posted their eleventh straight month of annual increases in May, up by 7.7% and 6.8%, respectively. However, the increases seen in both composite indexes also slowed from the March peak. The 10-city index includes currently better-performing metro areas such as New York and Chicago, which have seen relatively stronger housing markets since mid-2022, as the return to cities and offices continues.

On the other hand, among markets in the 20-city index, pandemic-era boomtowns are continuing to see price resets following excessive gains, and markets including Detroit and Tampa, Florida, which had strong appreciation over the last year, continue to cool. Compared with the 2006 peak, the 10-city composite index is now 55% higher, while the 20-city composite is up by 61%. Adjusted for inflation, which is showing signs of easing, the 10-city index is now 5% higher than its 2006 level, while the 20-city index is up by 10% compared with its 2006 high point. Nationally, home prices are 19% higher (adjusted for inflation) compared with 2006.

In May, 16 out of 20 metros saw slowing price growth year over year compared with the previous month (Figure 3). Las Vegas, Atlanta, and Denver all posted stronger price appreciation than the month before.  

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. While San Diego was the fastest appreciating market in the early months of 2024, prices have since decelerated.

Chicago led the group, posting the largest drop in price growth in May. Other cooling markets included Cleveland, Dallas, and Portland, Oregon. Portland and Denver were the slowest appreciating markets in the 20-city index.

While home prices increased by 0.9% nationally from April to May, nine metros recorded marginally weaker monthly gains. Boston led the index for weakest monthly price gains. Figure 4 summarizes the current year’s monthly changes in May compared with averages recorded between 2015 and 2019.

Cleveland, Detroit, and Seattle posted the nation’s largest monthly gains, rising 1.8%, 1.7%, and 1.4%, respectively. In New York, the monthly gain was notably higher than the average seen before the pandemic. No metro recorded a month-over-month decline in home prices in May. Portland, Phoenix, and Boston saw the slowest gains. (Figure 4).

The month-over-month comparison of appreciation by price tier and location also reveals relative changes in demand across the country. In May, all metros and price tiers saw home prices increases. New York led with the strongest appreciation in low and middle tiers, which were notably stronger than the same tiers in other metros.  

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% (Figure 5).

Given the anticipation around the Federal Reserve Board’s rate cut this coming September, home sales activity is likely to remain sluggish throughout the summer. At the same time, mortgage rates, which have eased since the April peak, will likely boost home prices.

Again, there will continue to be diverging trends across geographies. Markets with slower inventory boosts of existing and newly built homes will trend differently than markets where home prices continue to be challenged by other non-mortgage costs, such as taxes, insurance, and maintenance. Also, some potential homebuyers, especially those looking at higher-priced homes, may be sitting on the sidelines until after the election.

Still, with lower mortgage rates forecast for the latter part of the year, home sales activity will likely pick up.

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