United States home sales have gained the least in over two years, slowing down for a seventh straight month in August.
The National Index was up just 1.5% year-over-year, marking the weakest annual gain in two years and falling below the 3% inflation rate, according to the latest S&P Cotality Case-Shiller home price index.
“For the fourth straight month, home values have lost ground to inflation, meaning homeowners are seeing their real wealth decline even as nominal prices inch higher,” Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices Nicholas Godec said.
"The National Index rose 1.5% over the past year, with most of that gain coming in the recent six months (up 1.5%) while the prior six months were essentially flat.
The highest metro gains were in New York with a 6.1% gain, followed by Chicago and Cleveland, which recorded gains of 5.9% and 4.7% respectively.
On the other end of the spectrum, the largest declines were in Tampa, which fell 3.3% and Phoenix and Miami, which both dropped by 1.7%.
Mortgage rates still remain over 6.5% and continue to weigh on buyer demand even during what should be a busy summer season.
Godec said the market is finding a “new equilibrium” after the pandemic boom.
“The combination of high financing costs and prices that remain near record highs has limited transaction activity,” he said.
“Markets that experienced the sharpest pandemic-era gains are now seeing the largest corrections, while more affordable metros with stable local economies are holding up better.”
Godec said the recent years of appreciation have ended as the price growth is running at half the rate of inflation, and several markets begin to decline.
“This adjustment may ultimately lead to a more sustainable market, but for now, homeowners are watching their real equity erode while buyers face the dual challenge of elevated prices and high borrowing costs,” he said.
