Home prices in May were 19.7% higher than May of 2021, easing slightly from the historic high of 20.6% annual gains in April, according to the S&P CoreLogic Case–Shiller U.S. National Home Price Index.
This Index measures repeat sales of single family homes across the nine U.S. Census divisions, calculated monthly, using a three-month moving average. In May, no city reported price declines.
Case-Shiller shows slowing increases and the new catch phrase that analysts are using today is, “the housing market is cooling.”
With housing affordability continually squeezed, any alleviation of that pressure as demand remains high is welcomed news, and some analysts point to the rate of price increases slowing as a cooling.
But proclaiming the housing market has “gone cold” as Yahoo’s overzealous clickbait headline did yesterday, is inaccurate.
Last week, the National Association of Realtors’ (NAR’s) Chief Economist, Dr. Lawrence Yun addressed the U.S. Senate Committee on Banking, Housing, and Urban Affairs, noting that he does not foresee a nationwide drop in home prices despite projections that price growth is set to slow.
Dr. Yun testified that the potential for weaker sales should ease inventory pressures, but not enough to address affordability constraints boxing out would-be buyers.
“In the near term, I do not expect the situation to change appreciably,” Yun said Thursday. “Historic undersupply in the market, combined with continued demand, will likely drive ongoing issues with affordability for many Americans.
“Any short-term price adjustments, if they occur, will be less consequential compared to the immense longer-term housing affordability challenges we face as a country.”
Mortgage rates are on the rise, and with several increases expected from the Federal Reserve this year to address inflation woes, the housing sector which has been on fire does look to be cooling slightly. In the meantime, NAR continues to focus on the 6 million unit shortage in the American housing market.