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June’s monthly price gains are finally showing some decline

Although annual price increases are still overly aggressive, monthly gains indicate that the break may be on. Nationwide, home prices rose 18.3 percent in June from a year earlier, CoreLogic said, the 125th straight annual gain, although the monthly change fell for the second time. The gain in CoreLogic’s Home Price Index (HPI) was 0.6 percent from May to June, compared with 1.8 percent growth from April to May.

The company projects a significant slowdown in appreciation over the next year, though this has been their expectation for some time. The CoreLogic HPI forecast suggests home prices will increase another 0.6 percent from June 2022 to July 2022 but only 4.3 percent by June 2023.

Selma Hepp, Deputy Chief Economist at CoreLogic, said, “Signs of a broader slowdown in the housing market are evident, as home price growth decelerated for the second month in a row. This is in line with our previous expectations and given the significant cooling of buyer demand due to higher mortgage rates and the resulting increased cost of home ownership. Nevertheless, Buyers are still interested, which keeps the market competitive — especially for attractive homes priced right.

This graph compares the national year-over-year percent change for the CoreLogic HPI and CoreLogic Case-Shiller Index from 2000 to the current month with forecasts one year into the future. We note that both the CoreLogic HPI Single Family Composite Index and the CoreLogic Case-Shiller Index are posting positive, but moderating year-over-year percentage changes and forecast gains for next year.

While national price growth is slowing, eight states still post gains of more than 20 percent, all but one (South Dakota) in the Sun Belt. States with the largest year-over-year increases were Florida (31.8 percent), Tennessee (25.8 percent) and Arizona (24.9 percent). Phoenix was the top metro area with 26.1 percent year-over-year growth.

CoreLogic warned that several metropolitan areas ranked high in the likelihood of a fall in house prices over the next 12 months. Its Market Risk Indicator (MRI) places Bremerton-Silverdale, Washington, at high risk (70 percent-high probability) of such a downturn. Bellingham and Olympia-Tumwater, two other Washington metros, are at 70 percent risk, as are Boise City, Idaho, and Crestview-Fort Walton Beach-Destin, Florida.

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