A rising bar graph of houses.
Lanette Behiry/Real Estate News

Home prices rise 4 months in a row 

The Case-Shiller index for May shows steady home price growth since January and a slight dip compared to this time last year.

July 25, 2023
3 minutes

Key points:

  • According to Case-Shiller numbers, the housing market is approaching the highs seen during the same time period last year.
  • The Midwest, which didn’t experience the same pandemic boom as other regions, is now doing especially well.
  • It may still be too soon to say the correction is behind us, economists caution.

The latest S&P CoreLogic Case-Shiller Index indicates that home prices have rebounded in recent months and were down just 0.46% in May compared to the previous year. 

Both the national and 20-city indices have increased steadily this year. On a national level, prices were up 3.68% as of May.

When looking at the 20-city index — which includes the major metros of Atlanta, New York, Seattle and more — price growth fell 1.70% compared to a year ago but increased by 4.50% since the beginning of 2023.

Gains in the Midwest, a rebound on the West Coast 

One notable finding in the May report, noted CoreLogic Chief Economist Dr. Selma Hepp, is that once-sluggish markets are seeing the biggest gains this year.

"Price gains have been strongest in Midwest pandemic-laggers, Cleveland, Chicago, Detroit, which are now the hottest housing markets," Hepp said. "In addition, 11 metros saw reacceleration in annual prices. Prices in many of the previously declining West Coast markets are rebounding and showing some renewed vigor, particularly as those are also most constrained with a lack of homes for sale."

The just-released FHFA House Price Index (HPI) report for May also offers more detail on regional housing markets. Overall, the report found that U.S. home prices increased 0.7% between April and May, and also improved by 2.8% year-over-year. For the Mountain region, home prices fell 2.7% between May 2023 and May 2023, while home prices jumped 5.5% in the East North Central region, which contains the traditional industrial Midwest states around the Great Lakes. 

Unclear if the market has already bottomed out

Despite the upward price trend, it may be too early to declare that a correction is behind us, Bright MLS Chief Economist Dr. Lisa Sturtevant cautioned.

"The housing market remains uncertain and it's possible that price gains this summer will be followed by another dip in home prices in the fall," she said. 

But low inventory and high interest rates wouldn't be the only culprits in that scenario, Sturtevant added. She warns of an "affordability ceiling" in many metros, particularly as consumer savings continue to diminish, student loan payments resume, and job growth slows. 

"It's possible that the 'bottoming out' of home prices is just the first half of a 'w-shaped' pattern in the market," she said. 

Even Robert Shiller himself says it's really tough to determine what will happen next with home prices and borrowing rates. 

"We saw unusual behavior of the Case-Shiller Home Price National Index in the last six months," he said during a recent CNBC interview. "The market seemed to be falling and then it started to go up. People don't know what to make of what the Fed is going to do."

The Federal Reserve Board holds its next meeting to determine the federal fund rates tomorrow.

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