Home price growth in the U.S. may finally be slowing down.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 19.8% annual gain in August, the same from July — remaining at an all-time high. The 20-City Composite posted a 19.7% annual gain, down from 20% a month earlier. The 20-City results were slightly down below analysts’ expectations of a 20% annual gain, according to Bloomberg consensus estimates.
“In August 2021, the National Composite Index rose 19.84% from year-ago levels, marginally ahead of July’s 19.75% increase. This slowing acceleration was also evident in our 10- and 20-City Composites,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI, in a press statement. “Every one of our city and composite indices stands at its all-time high, and year-over-year price growth continues to be very strong, although moderating somewhat from last month’s levels. Price gains were once again broadly distributed, as all 20 cities rose, although in most cases at a slower rate than had been the case a month ago.”
The results are in line with expectations. Last week the National Association of Realtors (NAR) reported that the median existing-home price in September hit $352,800, up 13.3% from a year ago, slightly down from the previous month and the third straight month of declines.
Once again, Phoenix led the 20-City Composite, posting a 33.3% annual gain — followed by San Diego and Tampa, posting year-over-year gains of 26.2% and 25.9%, respectively. It is the 27th straight month that Phoenix recorded the fastest home price growth rate.
“On the one hand, homebuyers continued to face a competitive market in which home prices increased at a double-digit pace from one year ago. On the other hand, the rate of price growth is expected to slow somewhat,” said Danielle Hale, chief economist at Realtor.com, in a statement prior to the results. ”Going forward, the conditions buyers face are primarily dependent on two things: mortgage rates and housing supply. The average mortgage rate for a 30-year fixed-rate loan rose 10 basis points from 2.77% to 2.87% in August and has breached 3.0% with no sign of slowing since then, limiting some buyers’ ability to push home.”
Additionally, relief on the number of homes available for sale is expected to help put the brakes on home price growth. Lawrence Yun, NAR’s chief economist, recently said while inventory is still tight, the declines are not as severe. By December 2021 or January 2022, he expects inventory “to turn the corner and increase.”
“August data also suggest that the growth in housing prices, while still very strong, may be beginning to decelerate,” said Lazzara.
Amanda Fung is an editor at Yahoo Finance.