U.S. home prices continued to increase in May, rising for a third straight month as inventory remained tight, according to the S&P CoreLogic Case-Shiller Indices.
Month-over-month, and on an adjusted basis, home prices increased 0.7% nationwide.
The index’s 10-city and 20-city composites – measuring home prices in the 20 largest U.S. cities – posted increases of 1.1% and 1.0%, respectively.
Year-over-year, home prices nationally were down 0.5% compared with May 2022.
Chicago, Cleveland, and New York reported the highest year-over-year gains among the 20 cities.
Chicago came in first, with a 4.6% year-over-year price increase, Cleveland second at 3.9%, and New York third at 3.5%.
“The rally in U.S. home prices continued in May,” says Craig J. Lazzara, managing director at S&P DJI. “The ongoing recovery in home prices is broadly based. Before seasonal adjustment, prices rose in all 20 cities in May – as they had also done in March and April. Seasonally adjusted data showed rising prices in 19 cities in May, repeating April’s performance.”
Lazzara notes that the regional differences in home price gains “continue to be striking.”
“This month’s league table shows the Revenge of the Rust Belt, as Chicago, Cleveland and New York were the top performers,” he says. “If this seems like an unusual occurrence to you, it seems that way to me too. It’s been five years to the month since a cold-weather city held the top spot – and that was Seattle, which isn’t all that cold. Since May 2018, the top-ranked cities have been Las Vegas, Phoenix, Tampa, and Miami.
“At the other end of the scale, the worst performers continue to cluster near the Pacific coast, with Seattle and San Francisco at the bottom,“ Lazzara adds. “[In May] the Midwest unseated the Southeast as the country’s strongest region. The West remains weakest.”
Selma Hepp, chief economist for CoreLogic, says although home prices fell by 0.5%, year over year, in May, recent price gains “indicate an inflection ahead.”
“And while home sales activity still continues to tell a tale of two markets: one of the West, which is constrained by a lack of existing inventory, and the other of the Southeast and South, where the availability of new homes for sale is creating sales opportunities; home prices are not necessarily following the trend anymore,” Hepp says, in a statement. “Price gains have been strongest in Mid-West pandemic-laggers, Cleveland, Chicago, Detroit, which are now the hottest housing markets.
“In addition, 11 metros saw reacceleration in annual prices,” Hepp adds. “Prices in many of the previously declining West Coast markets are rebounding and showing some renewed vigor, particularly as those are also most constrained with a lack of homes for sale. Heating of competition among buyers is also reflected in an increasing share of home selling over the asking price again, 39 percent, compared to an average of 25 percent pre-pandemic. As a result, median price premium (ratio of sale price to list price) is back to positive, at 1 percent, after declining since last September.”
Photo: Tierra Mallorca