A home for sale in Arlington, Virginia, July 13, 2023.
Saul loeb | AFP | beautiful pictures
House prices in May increased for the 5th month in a row S&P CoreLogic Case-Shiller House Price Indexbut regional differences are widening.
Profits came despite a sharp increase in mortgage rates during the month.
Nationwide prices rose 0.7% month-to-month, seasonally adjusted. The 10 Cities Composite Index increased 1.1% and the 20 Cities Composite Index increased 1%.
Nationwide prices are still down 0.5% from May 2022, but only 1% below their June 2022 peak.
The 10 cities aggregate fell 1% year-on-year, slightly lower than the previous month’s 1.1% drop. The 20-city aggregate fell 1.7%, the same year-on-year decline in April.
“U.S. home prices started falling after June 2022, and May data reinforces the possibility that the final month of decline is January 2023,” said Craig Lazzara, chief executive officer of S&P DJI. “Granted, the price gains over the past four months could be truncated by rising mortgage rates or by general weakness in the economy. However, the breadth and strength of the May report is consistent with an upbeat view of the months ahead.”
However, Lazzara noted that “regional differences continue to stand out,” with cities in the so-called Rust Belt outperforming the rest of the nation. Prices in Chicago rose 4.6%; in Cleveland, 3.9%; and New York, 3.5% — for the best performing cities. The Midwest has replaced the South as the strongest region.
“If this sounds like an anomaly to you, it does to me. It’s been five years since a cold-weather city took the top spot (and that’s Seattle, which isn’t that cold),” Lazzara added.
Out of a 20-city pool, 10 were lower priced in the year ending May 2023 than in the year ending April 2023, and 10 were higher priced.
Cities in the West, where prices rose the most, were the worst performing cities in May. Seattle, down 11.3% and San Francisco, down 11%, were the worst.
Prices are rising again as supply is still very low. Existing homeowners are reluctant to sell, as most are paying mortgage rates less than half what they are today. Demand has bounced back after the initial mortgage rate hike, as buyers appear to have gotten used to a new normal.
Hannah Jones, research analyst at Realtor.com, said: “The housing market remains unaffordable for many buyers, but some areas are seeing a high level of competition due to low inventory for sale. “The limited number of homes currently available means many markets are seeing competition reminiscent of recent years.”
