Home prices rose 3.4% in May 2019, which is down from 3.5% growth the prior month, according to the latest CoreLogic Case-Shiller U.S. National HPI (HPI).
“Growth in home prices, as measured by the Case-Shiller HPI, began to stabilize in May. The more than 100 basis point decrease in mortgage rates since November has revived home sales and given buyers additional purchasing power in the market,” said Tian Liu, Chief Economist at Genworth Mortgage Insurance. “That extra purchasing power is beginning to show up in home prices.”
The 10-city composite annual increase came in at 2.2%, which is a slight decrease from 2.3% in the previous month.
“Despite the stabilization, home price growth has slowed from over 6% in early 2018 to less than 3% in May,” Liu said. “That slowdown has made homes less attractive as an investment, especially for investors with a shorter time horizon, even though the cost of financing has decreased. This is one factor contributing to the slower than expected rebound in home sales this year.”
Las Vegas led the nation with a 6.4% year-over-year price increase, and was followed by Phoenix’s 5.7% increase. CoreLogic states that seven of the 20 cities in the composite reported higher price increases in the year ending May 2019 than the year ending April 2019.
Danielle Hale, Chief Economist for realtor.com, added the slowing of growth has stabilized as lower mortgage rates have “boosted home-buyer purchasing power.”
While stating it is promising to see price growth in the fastest growing markets, Hale said the number of markets seeing growth was seven in May compared to nine in April. Also, the first time Seattle, Washington, posted a decline, although slight, at 1.2%.
“While increased availability of homes is driving the current slowdown in price growth, looking forward, if mortgage rates remain near recent lows, we could see prices pick back up as a result of improved affordability as well as the possibility of more limited inventory availability,” Hale said.