The numbers: The S&P CoreLogic Case-Shiller 20-city index decelerated to a 20.5% year-over-year gain in May down from 21.2% in the previous month.
In May, the 20-city index rose a seasonally adjusted 1.3%, down from 1.7% in April.
S&P said that the year-over-year growth in May was the second highest for the 20-city index. April’s gain was the peak.
A separate report from the Federal Housing Finance Agency showed a 1.4% monthly gain. And over the last year, the FHFA index was up 18.3%
Key details: Tampa, Miami, and Dallas reported the highest year-over-year gains among the 20 cities in May. Price growth was strongest in the South and Southeast, which saw 30.7% growth.
Minneapolis, Chicago, and D.C. reported the lowest year-over-year gains, though these cities still saw home prices grow.
No cities reported price declines.
Big picture: Economists think that the moderation in home price growth is the start of a new trend.
Housing affordability is down to its lowest level in 15 years, which should start to “restrain house price acceleration,” Lou Crandall, chief economist at Wrightson ICAP, wrote in a note prior to the release of the data.
The cost of borrowing has increased dramatically since last year, with the average on the 30-year fixed-rate at 5.54%, according to Freddie Mac. Last year around the same time, that rate was at 2.78%.
What the producers of the report said: Craig J. Lazzara, managing director at S&P DJI, said there was already evidence of deceleration. Price gains for May exceeded those for April in only four cities. As recently as February of this year, all 20 cities were accelerating, Lazzara said in a note accompanying the data.
Lazzara also warned that a more “challenging” environment “may not support extraordinary home price growth for much longer.”
What outside economists said: “In short, home prices rose less than expected in May… a deceleration in the monthly and annual pace is a move in the right direction,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note. “We expect a combination of rising mortgage rates – which is impacting affordability and weighing on demand — and easing supply should help take pressure off prices over time.”
Market reaction: Stocks