The numbers: U.S. home prices set another record in May, according to the latest edition of the S&P CoreLogic Case-Shiller Home Price Index.
The national index recorded an increase of 16.6% over the past year, up from the prior record of 14.8% set last month. The separate 20-city index, which gauges home prices across a group of major cities across the country, increased over the past year by 17% in May, up from 15% in the prior month.
The big picture: Although not reflected in the data, economists see signs that boom conditions in the housing market are starting to ease. On Monday, the government reported that new-home sales in June were 32% below their peak set in January and sale prices were softening.
What happened: In keeping with recent trends, Phoenix, San Diego and Seattle reported the highest year-over-year gains among the 20 cities in May. All 20 cities showed a gain in prices. Record price gains were seen in Charlotte, Cleveland, Dallas, Denver and Seattle.
Separately, the Federal Housing Finance Agency said its home price index rose a record 18% over the year ended in May.
What S&P said: “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. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question,” said Craig Lazzara, managing director at S&P DJI.
What outside economists said: “We expect some moderation in home price inflation in the second half of this year but still look for annual price growth to be in double digits,” said Nancy Vanden Houten, economist at Oxford Economics.
Market reaction: U.S. stocks
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