Radian: Home Price Gains Slowed Down Last Month


Home prices across the U.S. rose at an annualized rate of 4.5% in May from a month prior, according to Radian Home Price Index (HPI) data released by Red Bell Real Estate LLC, a Radian Group Inc. company.

The Radian HPI also rose 7.8 percent year-over-year (June 2019 to May 2020), which was slightly lower than the year-over-year increase of 7.9 percent recorded last month. Slowing home price growth is not unexpected given the dramatic COVID-19 impact on the ability to enter into and close many real estate transactions.

“Home price gains across the U.S. slowed in May – a month typically known for accelerating activity,” says Steve Gaenzler, senior vice president of data and analytics. “However, the month also recorded additional reversals in some of the recent, negative real estate transactional data trends.

“Nationally, the weekly counts of properties going ‘under contract,’ a leading indicator to closings and sales, ended the month with higher levels than in the same period of 2019. In addition, the Mortgage Bankers Association reported that applications for new mortgages were accelerating during the month and that the rate of new forbearance requests had begun to decline towards the end of the month,” he adds.

Nationally, the median estimated price for single-family homes and condos rose to $254,826. Across the U.S., home prices nationally rose 5.5 percent over the last three months, slightly lower than the 5.6 percent reported for the three months from February through April.

The impact of COVID-19 in May on national markets appears to have been to slow the rate of appreciation, as opposed to a decline in prices. Typically, home prices accelerate their growth momentum into the summer season. At 4.5 percent, the annualized rate reported in May was softer than recent years, but remained positive.

In May, home price appreciation slowed from the prior month in all regions except the Mid-Atlantic, a region that has, so far, reported the most negative HPI impacts during COVID-19. The weakest regions this month were the South and Northeast, while the Midwest continued to be the best performing region

 In a change from April’s report, all regions reported positive home price growth in May. Home buyer interest remained robust, while the future supply of new housing (New Private Housing Units Authorized by Building Permits as reported by the U.S. Department of Housing and Urban Development) recorded levels 50 percent lower than January 2020—both providing support for home prices in May.

The Western region recorded an actual 12-month price appreciation rate (+6.1 percent), a rate higher than its annualized change from April to May (+5.5 percent), but lower than the 3-month rate of 6.9 percent. Conversely, the South which recorded a 12-month appreciation rate of 6.8 percent was only able to generate a 2.5 percent annualized growth rate last month.

Across the 20 largest metro areas of the U.S, all recorded positive price appreciation in May, but all were at slower rates than reported in April. Two metros in particular, Baltimore and New York, recorded higher rates of price growth last month after a series of months with rates well below longer-term growth.

The weakest metros in May based on their annualized growth included Washington, D.C. (+0.0 percent), Los Angeles (+1.9 percent), Baltimore (+2.1 percent) and Miami (+2.1 percent).

The strongest included Minneapolis, Seattle, New York and St. Louis, all with greater than 6.4 percent growth in May.

More details can be found here.

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