Home prices in America's 20 largest cities fell for the 4th straight month in June (the latest data available from S&P CoreLogic's Case-Shiller data released this morning).
The 0.25% MoM drop was larger than expected and dragged the YoY price growth down to +2.
15% - the weakest since July 2023...
Source: Bloomberg
The US is coming off its weakest spring selling season in 13 years after high prices and mortgage rates sidelined many would-be buyers.
With few eager shoppers in the hunt, sellers are warming up to discounts and other concessions in parts of the country where listings have piled up.
"June’s results mark the continuation of a decisive shift in the housing market, with national home prices rising just 1.9% year-over-year—the slowest pace since the summer of 2023," according to Nicholas Godec, S&P Dow Jones Indices.
"Looking ahead, this housing cycle’s maturation appears to be settling around inflation-parity growth rather than the wealth-building engine of recent years"
Among 20 major cities, New York still “stands as a stark outlier,” Godec said, leading the index with a 7% annual gain in prices. Following were Chicago, with a 6.1% increase, and Cleveland, at 4.5%.
Prices, meanwhile, are falling in former pandemic-era “darlings,” such Phoenix, Tampa and Dallas, he said.
Tampa’s 2.4% year-over-year decline was the biggest in the index.
On the bright side, given the shift lower in mortgage rates in recent weeks, we may see price pressure relieved.
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Source: Bloomberg
Additionally, home price appreciation does seem to track very closely with bank reserves at The Fed (6mo lag), which implies prices could re-acclerate once again...
Source: Bloomberg
Declining home prices (and the follow through into PCE/CPI calculations for Shelter costs) could more than offset any tariff-driven anxiety over the next few months.
The question remains, that after slashing rates by 100bps, home prices have started to decline (with significant lag)... is that what The Fed wants?
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