U.S. home price growth slows for first time in five months

Nationwide price index still posted a 20% annual gain in April, but was down slightly from March

(iStock, Illustration by Kevin Cifuentes for The Real Deal)
(iStock, Illustration by Kevin Cifuentes for The Real Deal)

Is the U.S. housing market finally slowing down? The latest report gives inconclusive answers.

The S&P CoreLogic Case-Shiller Index posted a 20.4 percent annual gain in April, a slight drop from the 20.6 percent gain posted in March and the first time since November that annual price growth decelerated.

The evidence of slowing price growth is far from clear, though. The 10-city composite, which measures the country’s 10 largest metro areas, increased 19.7 percent in April, up from 19.5 percent in March. And from a historical standpoint, a 20.4 percent annual gain in home prices remains astronomically high.

Still, the relative flatness of each index shows a slowdown may finally be coming as buyers cope with low inventory and rising mortgage rates on top of record-high home prices.

“April 2022 showed initial (although inconsistent) signs of a deceleration in the growth rate of U.S. home prices,” said S&P’s Craig Lazzara in a statement.

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After snapping Phoenix’s nearly three-year status as the fastest growing city in terms of home prices, Tampa repeated as the leader for the second straight month with a 35.8 percent year-over-year increase. Miami followed at 33.3 percent, with Phoenix in third at 31.3 percent. Each of the top 20 cities saw double-digit price increases year-over-year.

Home prices surged at the start of the pandemic as buyers capitalized on work-from-home policies and settled into more comfortable digs. Low inventory has kept prices on the rise, as buyers have shelled out well above asking prices to win bidding wars.

But a drastic hike in mortgage rates has hindered Americans’ buying power. Housing affordability recently hit a 15-year low, according to Zillow. In April, monthly mortgage payments took 28 percent of homeowners’ income, on average; 30 percent is considered a cost burden.

“A more challenging macroeconomic environment may not support extraordinary home price growth for much longer,” Lazzara added.

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