National growth in home values continues to slow, with prices now falling in 9 out of the 20 major metro areas tracked by a key index.
The value of single-family homes in the U.S. as measured by repeat transactions rose 1.5% in August compared to a year earlier, according to data from the S&P Cotality Case-Shiller Index released Tuesday.
That was down from the 1.7% gain registered in July and the slowest annual growth pace since 2023, when home values briefly declined.
Among the 20 major metros tracked by Case-Shiller, home values fell on an annual basis in nine, all located in the South and West: Tampa, Phoenix, Miami, San Francisco, Dallas, Denver, San Diego, Seattle, and Los Angeles.
Seattle and Los Angeles newly appeared on the list of cities with falling home prices, while the other seven metros had previously registered annual declines in July.
New York again reported the highest annual price gain among the 20 cities with a 6.1% increase in August, followed by Chicago and Cleveland with annual increases of 5.9% and 4.7%, respectively.
“August’s data shows U.S. home prices continuing to slow,” says Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices. “For the fourth straight month, home values have lost ground to inflation, meaning homeowners are seeing their real wealth decline even as nominal prices inch higher.”
Indeed, August’s annual home price gain of 1.5% is well below the 2.9% rate of overall inflation seen in the same period, meaning that home values are falling on an inflation-adjusted basis.
While that’s bad news for existing homeowners, it could provide some relief to homeowners who have struggled with affordability in recent years, especially combined with a recent dip in mortgage rates.
Average mortgage rates fell last week to 6.19%, their lowest level in more than a year according to Freddie Mac, as the Federal Reserve prepares to continue cutting its benchmark interest rate.
“As home prices cool and mortgage rates come down, home shoppers are finding some improvement in affordability,” says BrightMLS Chief Economist Lisa Sturtevant. “But growing economic uncertainty is keeping others on the sidelines.”
Regional divergence in home values persists
While the overall growth in U.S. home values was muted in the latest report, the national trend hides stark divergences at the regional level, with prices falling in the South and West but continuing to grow healthily in many Northeast and Midwest markets.
“Regionally, markets in the Northeast and Midwest continue to perform relatively better, supported by tighter resale supply and steadier demand,” says Realtor.com® Senior Economist Anthony Smith.
By contrast, says Smith, many metros in the Sun Belt and West are showing clearer signs of softening, with inventory recovering more rapidly, homes taking longer to sell, and price cuts and delistings on the rise.
Tampa, where home prices have been dropping annually for 10 straight months, again saw the biggest drop, with home values there down 3.3% in August from a year earlier.
Meanwhile, cities such as New York and Chicago, which stalled during the pandemic-era exodus to the Sun Belt, are now enjoying the greatest appreciation in home prices.
“Markets that experienced the sharpest pandemic-era gains are now seeing the largest corrections, while more affordable metros with stable local economies are holding up better,” says Godec. “Looking ahead, the housing market appears to be finding a new equilibrium after the pandemic boom.”
Still, there are signs that housing market weakness may break regional containment from the South and West, with home values falling on a monthly basis in 19 out of the top 20 metros in August.
On a monthly basis, only Chicago saw home prices rise in August, with a 0.26% gain there compared to July. Portland, OR, and Los Angeles had the biggest monthly declines, both falling more than 1%.
“With price growth running at half the rate of inflation and several major markets in decline, the rapid appreciation of recent years has clearly ended,” says Godec. “This adjustment may ultimately lead to a more sustainable market, but for now, homeowners are watching their real equity erode while buyers face the dual challenge of elevated prices and high borrowing costs.”
The Case-Shiller Index reports on a two-month delay and reflects a three-month moving average of home sales prices.
Homes usually go under contract a month or two before they close, so the August data primarily reflects purchase decisions made in the late spring or early summer.
Although the Index’s price data is delayed by several months, it is considered one of the best available measures of changing home values, because it is based on repeat transactions on the same properties.
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