Annual home price growth slowed in June, marking the third consecutive month of deceleration, according to the latest CoreLogic S&P Case-Shiller Index.
Home prices rose 18% annually in June, down from the 19.9% annual increase in May, according to the report. On a monthly basis, home prices rose 0.6% from May to June.
But one expert noted that the National Composite, a measure of home prices, continues to see significant gains despite the recent deceleration.
"It’s important to bear in mind that deceleration and decline are two entirely different things, and that prices are still rising at a robust clip," Craig Lazzara, S&P Dow Jones Indices managing director, said in the report. "For the first six months of 2022, in fact, the National Composite is up 10.6%. In the last 35 years, only four complete years have witnessed increases that large."
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This is where home prices rose the most
The 10-City Composite index, which looks at home price growth in the top 10 U.S. cities, rose 17.4% annually in June, down from 19.1% annually in May, according to the Case-Shiller Index. The 20-City Composite also slowed, having increased by 18.6% annually in June, down from 20.5% annually in May.
Home prices in Tampa, Miami and Dallas saw the highest year-over-year gains in June among the top 20 cities, with annual increases of 35%, 33% and 28.2%, respectively. But only one of the 20 cities reported higher annual price increases in June versus May.
"The market’s strength continues to be broadly based, as all 20 cities recorded double-digit price increases for the 12 months ended in June," Lazzara said. "In 19 out of 20 cases, however, June’s reading was less than May’s, showing the impact of deceleration at the regional level."
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Home price growth likely to continue decelerating
In order to bring down decades-high inflation, the Federal Reserve continues to raise interest rates. But these increased rates are also slowing the housing market and bringing prices down.
"We’ve noted previously that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that continued as our June data were gathered," Lazarra said. "As the macroeconomic environment continues to be challenging, home prices may well continue to decelerate."
At its most recent meeting, the Fed increased interest rates for the fifth time this year by 75 basis points, bringing the target range for the federal funds rate to 3% to 3.25%. And it is expected to continue raising rates through the remainder of 2022 and into 2023.
"Housing market activity cooled markedly since June’s surge in mortgage rates leading to widespread slowing of home price growth and rising concerns over potential home price declines in the future," CoreLogic Deputy Chief Economist Selma Hepp said in a statement. "According to CoreLogic HPI Forecast for June, home prices will continue to slow but not decline in most markets over the next year."
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