The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine census divisions, saw a 4.5% year-over-year rise in May. This was slightly lower than the 4.6% annual increase recorded in April. The 10-City Composite’s 3.1% annual increase was below the 3.3% level recorded in the previous month while the 20-City Composite’s 3.7% year-over-year gain was down from the 3.9% gain recorded one month earlier.
The National Index saw a 0.7% month-over-month increase during May, while the 10-City and 20-City Composites posted 0.3% and 0.4% increases, respectively, before seasonal adjustment. After seasonal adjustment, the National Index saw a scant 0.1% month-over-month increase while the 10-City and 20-City Composites remained flat. During May, 17 of 19 cities reported increases before seasonal adjustment, while 11 of the 19 cities reported increases after seasonal adjustment; data from Detroit was unavailable due to delays at the local record office created by Michigan’s pandemic-related lockdown.
Phoenix, Seattle, and Tampa had the highest year-over-year gains in May: Phoenix topped the nation with a 9.0% year-over-year price increase, followed by Seattle with a 6.8% increase and Tampa with a 6.0% increase. Three of the 19 cities reported higher price increases in the 12-month period ending in May versus the 12 months ending in April.
"May's housing price data were stable," said Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices, who pointed out that while prices increased in May, “they did so at a decelerating rate. We observed an analogous development at the city level: prices increased in all 19 cities for which we have data, but accelerated in only three of them—in contrast with 12 cities last month and 18 the month before that.”
Lazzara added, "More data will obviously be required in order to know whether May’s report represents a reversal of the previous path of accelerating prices or merely a slight deviation from an otherwise intact trend. Even if prices continue to decelerate, that is quite different from an environment in which prices actually decline."
Reaction from industry thought leaders on the new data was mixed.
“The pandemic has not stopped the consistent home price growth we have witnessed in recent years,” said Bill Banfield, EVP of Capital Markets at Quicken Loans. “With inventory low and a recent surge of homebuyers interested in finding a home where they can feel comfortable no matter what life presents them, we will likely see steady increases through the rest of the summer.”
“In a remarkable show of resilience, the housing market has stared the pandemic right in the eye and hasn’t blinked,” observed Zillow Economist Matthew Speakman. “Record-low mortgage rates and a shortage of available homes have fueled competition amongst buyers in the spring and early summer, leading to homes flying off the market at their fastest pace in years and home prices to continue to rise. The savings afforded by record-low mortgage rates allows those who are still in a strong financial position the opportunity to buy a home—and might also allow them to pursue homes that were previously above their price range.”
However, Speakman warned that “substantial risks have emerged in recent weeks” related to the persistence of the coronavirus and “the broader economic uncertainty that accompanies it.” He stated it was likely “the housing market will feel the effects of this downturn at some point, but a shortage of inventory and low rates should continue to place upward pressure on prices.”
Realtor.com Senior Economist George Ratiu noted the new data covered “a period marked by the national shelter-at-home policy, highlighting the direct impact from COVID-19.” He added that the summer homebuying season will encourage buyers “to make up for lost time during the quarantine.” But due to continued uncertainty on the state of the economy coupled with lingering inventory shortages, he warned that “the economic outlook and housing supply remain uncertain at best.”