In May, home prices in the United States fell from a year earlier, marking the second month in a row that prices fell year over year.
The S&P CoreLogic Case-Schiller National Home Price Index, which represents a three-month moving average of home prices across the country, decreased by 0.5 percent last year, the greatest yearly drop since 2012. In April, the index was 0.1 percent lower than the previous month.
Despite a decline in yearly numbers, the indicator was up 0.7 percent from the previous month. This was the fourth consecutive monthly gain.
Recent price gains indicate that the housing market has bottomed and is now rebounding from the shock of the Federal Reserve's quickest hike cycle in decades. This year, mortgage rates have fluctuated between six and seven percent.
An earlier-than-expected rebound in the housing market presents an unanticipated challenge to the Fed's anti-inflationary program. Housing is normally one of the most responsive sectors to Fed policy, so rising prices might indicate that the economy has already absorbed the Fed's previous rises and inflationary pressures are about to resurface.
The Case-Shiller 10-city index, which gauges house values in the nation's major metropolitan areas, declined 0.9 percent year on year, down from the 1.1 percent drop in April. The index is down 1.6 percent from the latest peak of property prices in June of last year. Yet, the 10-city index rose 1.1 percent on a monthly basis.
The 20-city index was down 1.7 percent year on year and up one percent month on month. Prices are down 2.3 percent from their high in June 2022.
“The rally in U.S. home prices continued in May 2023,” said Craig J. Lazzara, Managing Director at S&P DJI. “The ongoing recovery in home prices is broadly based. Before seasonal adjustment, prices rose in all 20 cities in May (as they had also done in March and April). Seasonally adjusted data showed rising prices in 19 cities in May, repeating April’s performance.”
The Case-Shiller indexes are widely recognized as the gold standard for measuring house prices. These are based on repeat sales statistics, which are seen to be more accurate than the National Association of Realtors' monthly median price data. The mix of properties sold in a month can have an impact on the median figure. For example, even if home prices have not moved or even grown, the median might decline if a higher volume of transactions occurs in lower-priced properties. According to the NAR, the median price of existing houses sold in June declined by 0.9 percent.