Home prices rose in May in defiance of down housing market

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Prices rose 0.7 percent from April to May after adjusting for increases typically experienced in spring, according to estimates released Tuesday by CoreLogic and the Federal Housing Finance Agency.

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A drought of new listings continued to push up home prices in May despite an ongoing low-transaction environment, according to two widely tracked measures released Tuesday.

Prices rose 0.7 percent from April to May after adjusting for the typical increase seen that time of year, two independent estimates from S&P CoreLogic and the Federal Housing Finance Agency agreed.

In a more on-the-ground sense, prices are rising even faster than that. Before accounting for seasonal growth in home prices that typically occurs in late spring, home prices were 1.2 percent higher in May than the month before. 

“Home prices in the U.S. began to fall after June 2022, and May’s data bolster the case that the final month of the decline was January 2023,” S&P Dow Jones Indices Managing Director Craig Lazzara said in a statement. “Granted, the last four months’ price gains could be truncated by increases in mortgage rates or by general economic weakness. But the breadth and strength of May’s report are consistent with an optimistic view of future months.”

It’s a striking trend, considering the number of existing-home sales remain down 19 percent year over year, according to the National Association of Realtors.

The two measures — widely followed by the industry because of how they account for the price of similar homes over time, not just the average price of homes sold — differed on the question of whether home prices were up year-over-year. 

According to the S&P CoreLogic Case-Shiller method, home prices were 0.5 percent lower in May than they were the year before. By the FHFA’s estimate, prices were 2.8 percent higher year over year. 

Still, both numbers peg home prices as far more resilient than the number of transactions would suggest. After a brief uptick in inventory late last year, the number of homes for sale at a given time has returned to bare-bones levels in many cities. 

 “U.S. house prices increased moderately in May, continuing the trend of the last few months,” Nataliya Polkovnichenko, supervisory economist for the FHFA Division of Research and Statistics, said in a statement. “However, house prices in some regions of the country remained below the levels seen one year ago.”

The most extreme example of this, by FHFA’s reckoning, was the mountainous region that includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming. Home prices there were down 2.7 percent year over year, the biggest annual drop of any region.

That stands in sharp contrast to the Midwestern region that includes Illinois, Indiana, Michigan, Ohio and Wisconsin. Home prices there were up 5.5 percent year over year, according to FHFA.

Meanwhile, the Pacific division states — hit especially hard by last year’s home-price declines — appear to be seeing upward pressure on home prices in more recent weeks. From April to May alone, prices in the West Coast states plus Alaska and Hawaii were up 1.7 percent even after accounting for the normal seasonal upswing.

Email Daniel Houston

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