Nationwide gains in home prices just half the story, report shows

The higher prices in some major cities may be slowing the pace of sales

Jul.July 31, 2018 09:00 AM
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones  (Credit: iStock)

The positive news for the economy is that housing prices throughout the U.S. remained strong in May, maintaining their steady growth.

The CoreLogic Case-Shiller national home price index released Tuesday showed a 6.4 percent gain from the same period last year. That is similar to the growth recorded in April year over year.

The less positive news: Higher home prices are affecting the pace of sales, which is slowing around the country. New home sales reached an eight-month low in June, dropping by 5.3 percent from May, while existing home sales fell for the third straight month.

David Blitzer, who leads the index committee at S&P Dow Jones, said price increases are affecting affordability. Factoring income into pricing, it has “gotten consistently worse over the last 18 months,” he said.

That’s reflected in some of the larger markets around the country. In Manhattan, the number of home sales dropped by 34.2 percent year over year in May. While home prices were higher than they were a year ago, they’ve barely moved since March.

Miami too may be showing signs of slowing. The gain in prices in the second quarter was 2.3 percent less than the gain in the first quarter, according to a recent report by Attom Data Solutions.

In Los Angeles, where the need for affordable housing is at a critical stage, the home prices were 7.6 percent higher than in May 2017.

Miami posted a 5 percent gain, with New York a 4.2 percent higher and Chicago 3.3 percent above what it was last year.
The cities that showed the strongest growth, and the only ones to post double-digit percentage gains were Seattle, Las Vegas and San Francisco. Washington, D.C. saw the smallest growth, with prices coming in 3.1 percent higher than last year.

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