Is home-price growth finally cooling? That’s a question raised by the S&P CoreLogic Case-Shiller Index for August, which showed deceleration on a year-over-year basis and a slight dip relative to July.
On a non-seasonally adjusted basis, the national home price index posted a 4.2% gain year over year, less than the 4.8% gain from July. The monthly index fell by 0.1%. Economists pointed to lower mortgage rates as the reason for slower growth.
According to Bright MLS, it’s the slowest annual gain in 2024 thus far and the first monthly decline since December 2022.
“This month’s release captures the time period during which rates dropped from roughly 7% to 6.35%,” Realtor.com analyst Hannah Jones said in a statement. “Though significant, this drop in rates has not yet resulted in a significant uptick in demand and home sales activity, which meant home price growth continued to mellow.”
The 10-city and 20-city composite indices also showed a slight dip in prices month over month. The 10-city index dropped 0.4% relative to July and rose 6% year over year, which represents a deceleration from the 6.8% year-over-year gain in July.
The 20-city composite posted similar numbers, with a 0.3% month-over-month decline and a 5.2% gain compared to August 2023. That’s down from 5.9% annualized growth in July.
Among the 20 cities analyzed, New York posted the highest year-over-year home price growth at 8.1%, followed by Las Vegas (+7.3%), Chicago (+7.2%), Cleveland (+6.9%) and Detroit (+6%). New York and Las Vegas also had the highest monthly gains in July.
Denver posted the slowest home-price growth compared to a year ago at 0.7%, followed by Portland, Oregon (+0.8%); Dallas (+1.6%); Minneapolis (+2%); and Phoenix (+2.1%).
Despite the Federal Reserve’s half-point interest rate cut in September, rates for 30-year conforming loans have climbed back up to 6.7%, according to HousingWire’s Mortgage Rates Center. This is significantly higher than rates in August and likely foreshadows the Case-Shiller index accelerating again when results for the next few months arrive.
“Monthly appreciation stabilized with the break in mortgage rates pulling in more buyer’s interest at a time of pinched affordability,” Zillow chief economist Skylar Olsen said in a statement.
“That mortgage rate relief continued into September, but has since dissipated, and perhaps that renewed strength in monthly appreciation along with it,” she added. “As we near the slower fall months, buyers are likely to continue refusing steep pricing, but sellers should continue to expect record high home equity, especially in the northern and southwestern swaths of the U.S.”
