Home prices grew at the slowest pace in 8 months, Case Shiller says, but still inch up to new record high

By Aarthi Swaminathan

Major real-estate markets are seeing home-price rises slow, S&P says

The numbers: Home prices in the 20 biggest U.S. metro areas set yet another record high in July, but the pace of price rises has decelerated significantly as prices and mortgage rates weigh on home buyers.

The S&P CoreLogic Case-Shiller 20-city house-price index rose 0.3% in July compared to the previous month.

Home prices in the 20 major U.S. metro markets were up 5.9% in the last 12 months ending in July.

That's a slowdown compared to an increase of 6.5% the previous month. Economists surveyed by Dow Jones Newswires and The Wall Street Journal expected the 20-city index to increase 6%.

It's also the slowest pace of appreciation for the 20-city index since November 2023.

A broader measure of home prices, the national index, rose 0.2% in July and was also up 5% over the past year. All numbers are seasonally adjusted.

The 20-city and the national index are at an all-time high.

Key details: New York posted the biggest year-over-year home-price gains in July. Prices were up 8.8%.

Home prices grew the slowest in Portland, by 0.8%.

   Cities         Change from last year 
   Atlanta        4.5% 
   Boston         6.5% 
   Charlotte      5.8% 
   Chicago        6.7% 
   Cleveland      7% 
   Dallas         1.9% 
   Denver         1.3% 
   Detroit        6.7% 
   Las Vegas      8.2% 
   Los Angeles    7.2% 
   Miami          6.5% 
   Minneapolis    2% 
   New York       8.8% 
   Phoenix        2.9% 
   Portland       0.8% 
   San Diego      7.2% 
   San Francisco  3.4% 
   Seattle        6% 
   Tampa          2.2% 
   Washington     5.5% 
   Composite-20   5.9% 

A separate report from the Federal Housing Finance Agency also showed home prices were up by 0.1% in July when compared to the previous month, and were up 4.5% in the past year.

"For the third consecutive month U.S. house prices showed little movement," the agency said. "Gradually declining mortgage rates and relatively flat house prices may improve housing affordability."

The median price of a resale home was $421,400 in July, and a newly built home was $436,700.

Big picture: The silver lining from this report is that even though home prices continue to reach new heights, the pace of appreciation has significantly slowed over the last few months.

But it's unclear if prices will slow even further. Starting in August, mortgage rates have dropped significantly, which increases buyers' purchasing power. And that could draw more buyers off the sidelines, and increase competition that in turn pushes prices even higher.

What S&P said: "Accounting for seasonality of home purchases, we have witnessed 14 consecutive record highs in our National Index," Brian D. Luke, head of commodities, real estate and digital assets at S&P Dow Jones Indices, said in a statement.

"While the S&P 500 SPX has achieved 39 record highs and the S&P GSCI Gold TR XX:SPGSGC hit 35 record highs, housing is following a similar trajectory," he added.

But "the growth has come at a cost, with all but two markets decelerating last month, eight markets seeing monthly declines, and the slowest annual growth nationally in 2024," Luke said.

What are they saying? "This month's index includes home sales in May, June, and July, a period in which home sales activity, time on market, and price cuts began to all swing towards a buyer's market," Ralph McLaughlin, a senior economist at Realtor.com, said in a statement.

"With mortgage rates peaking in May, next month's release will begin to fully incorporate this inflection in the housing market that began in June," he added. (Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)

Taking a step back, "throughout 2024, home prices have defied expectations," Lisa Sturtevant, chief economist at Bright MLS, said in a statement.

"Although mortgage rates continued to rise through the first half of the year, eager buyers competed over limited inventory driving home prices higher," she added, but "now that mortgage rates are falling and buyers seem to be jumping back into the market, where will home prices go this fall?"

"It is possible that lower rates this fall could actually come along with slower home price growth as more sellers get into the market and inventory continues to rise," Sturtevant said. "With affordability a big challenge, many buyers in the market have less ability to offer [the] above [price homes are listed for]."

-Aarthi Swaminathan

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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09-24-24 0939ET

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