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The Boston real estate market – Case Shiller Index Report

Home price increases slowed ever so slightly in April, but it is the first potential sign of a cooling in prices.

Prices rose 20.4% nationally in April compared with the same month a year ago, according to the S&P CoreLogic Case-Shiller Index. In March, home prices grew 20.6%. The last slight deceleration was in November of last year.

The 10-city composite annual increase was 19.7%, up from 19.5% in March. The 20-city composite posted a 21.2% annual gain, up from 21.1% in the previous month.

In a change from the last five months, when most of the 20 cities saw month-to-month price gains, only nine cities saw prices rise faster in April than they had done in March. Cities in the South continued to see the strongest monthly gains, including Charlotte, North Carolina; Tampa, Florida; Atlanta, Dallas and Miami.

“April 2022 showed initial (although inconsistent) signs of a deceleration in the growth rate of U.S. home prices,” Craig Lazzara, managing director at S&P DJI, wrote in a release. “We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April. April’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them.”

Tampa, Miami and Phoenix continued to lead the pack with the strongest price gains. Tampa home prices were up, with a stunning 35.8% year-over-year price increase, followed by Miami, with a 33.3% increase, and Phoenix, with a 31.3% increase. Nine of the 20 cities reported higher price increases in the year ending April 2022 versus the year ending March 2022.

Cities with the smallest gains, although still in double digits, were Minneapolis, Washington and Chicago.

Not only are these price gains for April, but the index is a three-month moving average. The average rate on the 30-year fixed mortgage just crossed the 5% mark in April after rising from around 3% in January. By June it had crossed 6%.

“We noted last month that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that had only just begun when April data were gathered,” said Lazzara. “A more challenging macroeconomic environment may not support extraordinary home price growth for much longer.”

The housing market is already cooling, with slower sales and reports of price drops among some sellers. The supply of homes for sale has also increased steadily, as more listings come on the market and homes already on it sit longer. Active inventory last week was 21% higher than it was the same week one year ago, according to Realtor.com.

“For buyers and sellers, the road ahead will require more flexibility in pricing, brushing up on negotiation skills, and acknowledging that market conditions today are different than even six months ago,” said George Ratiu, senior economist at Realtor.com.

Updated: Boston Real Estate Blog 2022

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https://www.cnbc.com/2022/06/28/home-price-increases-slowed-slightly-in-april-says-sp-case-shiller.html

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The Boston real estate market – Case Shiller Index Report

The 10-city composite annual increase was 16.4% in May from 14.5% in April.
The 20-city composite gained 17% year over year, up from 15% the month before.
All 20 cities reported higher price increases in the year ending May 2021 versus the year ending April 2021.

Home prices continue to break records, as strong demand slams up against weak supply.

Nationally, home prices were 16.6% higher than in May 2020, the highest reading in the S&P CoreLogic Case-Shiller report’s 30-plus years. In April, it rose 14.8% year over year.

The 10-city composite annual increase was 16.4% in May versus 14.5% in April. The 20-city composite gained 17% year over year, up from 15% the month before. All 20 cities reported higher price increases in the year ending May 2021 versus the year ending April 2021.

Phoenix, San Diego and Seattle reported the highest year-over-year gains among the 20 cities in May. Phoenix led the way with a 25.9% year-over-year price increase, followed by San Diego with a 24.7% increase and Seattle with a 23.4% increase. Chicago, Cleveland and Minneapolis reported the lowest gains, although they were still in low double-digits.

“A month ago, I described April’s performance as ‘truly extraordinary,’ and this month I find myself running out of superlatives,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI. “We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the Covid pandemic, as potential buyers move from urban apartments to suburban homes. May’s data continue to be consistent with this hypothesis.”

Five cities – Cleveland, Dallas, Denver, Seattle and Charlotte, North Carolina – saw their all-time highest annual gains. Price gains in all 20 cities were in the top quartile of historical performance; in 17 cities, price gains were in top decile.

Mortgage rates fell slightly to start May and held within a narrow range throughout the month. Rates have been so low for so long that even slight monthly moves higher have done nothing to take the heat out of home prices.

Sales of new and existing homes have weakened in the past few months, largely due to sky-high prices. The inventory of homes for sale has finally started to increase, albeit slowly. An increase in listings is the only thing at this point that could pull price gains back a bit.

Demand is still strong due to simple demographics of the largest generation, millennials, moving into its homebuying years. Mortgage rates have also been falling again in the past few weeks.

“This dynamic confluence of housing developments is helping keep price growth in check as we approach August. Looking at the months ahead, we expect inventory to continue growing into the fall, shifting the typical seasonal trend and keeping real estate activity on a roll,” said George Ratiu, senior economist at Realtor.com.

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Yesterday, I was concerned about the local Boston real estate sales market. Today, I see signs of good news ahead. However, I still haven’t read the full report yet.

CNBC posted the click bait above, which is shocking because they are usually so negative about real estate – then published the key points below:

Boston real estate

Boston real estate

Mortgage rates dropped back into the threes at the end of May, yet the national index didn’t change between June and July. Usually, every other time buyers could get a mortgage rate that started with a 3, they’ve come running.  But not this time – home prices are stalled year-over-year.

But never fear, our head cheerleader won’t let that get in the way:

Lawrence Yun, NAR’s chief economist said, “As expected, buyers are finding it hard to resist the current rates,” he said. “The desire to take advantage of these promising conditions is leading more buyers to the market.”

Source: Case Shiller Report

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