Home prices moved sideways in the spring but are still on the rise and pulling down existing and pending home sales.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 6.4% annual gain in May, the same as the previous month. The 20-City Composite recorded a 6.5% year-over-year gain — beating analysts’ estimates of 6.4%, but down from 6.7% in April.
The annual gains have topped 5% every month since August 2016, according to David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones, in a press statement.
“Home prices continue to rack up gains two to three times greater than the inflation rate,” he said. “Unlike the boom-bust period surrounding the financial crisis, price gains are consistent across the 20 cities tracked in the release. Not only are prices rising consistently, they are doing so across the country.”
The price increases are pulling down other key housing data: existing and pending home sales. The S&P CoreLogic Case-Shiller Indices specifically cover the sales of existing single family homes.
“Sales of existing single family homes peaked last November and have declined for three months in a row,” said Blitzer. “The number of pending home sales is drifting lower as is the number of existing homes for sale. Sales of new homes are also down and housing starts are flattening.”
The U.S. Commerce Department said the sale of new U.S. single-family homes in June fell 5.3% to a seasonally adjusted rate of 631,000 — an eight-month low — and the previous month’s results were revised lower. Some experts recently pointed out that the data shows the housing market is losing momentum and that raises a red flag for the overall health of the economy.
As mortgage rates rise and wage growth lags, affordability becomes a major issue. The Labor Department said Tuesday morning wages and salaries rose 0.5% in the second quarter, down from a 0.9% surge in first three months of the year.
“Affordability has gotten consistently worse over the last 18 months,” said Blitzer. “The combination of rising home prices and rising mortgage rates are beginning to affect the housing market.”
Amanda Fung is an editor at Yahoo Finance.
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