Home price increases slowed down for the first time in months, a signal that the US housing market may finally be starting to cool down.
Home prices rose 20.4% in April compared with the same time last year, according to the S&P CoreLogic Case-Shiller National Home Price Index, the leading measure of US home prices. That's down from 20.6% in March -- the first time in four months that there has been even a slight decrease in home price growth.
The 20-City Composite saw a 21.2% year over year increase, up from 21.1% in March, and all 20 cities in the index saw double-digit price increases for the year ending in April. Still, compared with the last five months, only nine cities saw prices rise at faster rate than they did in the previous month.
"April 2022 showed initial signs of a deceleration in the growth rate of US home prices," said Craig J. Lazzara, managing director at S&P DJI. "We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April."
Sunbelt cities like Tampa, Miami and Phoenix had the highest increases, with Tampa reporting the highest price growth at 35.8% year over year. April's growth rate was still strong overall, despite the slight decrease in price increases, indicating competition is still tight among home buyers even with surging mortgage rates and high prices.
The Federal Reserve has raised interest rates three times this year in an attempt to slow inflation and sky-rocketing home prices, but buyers will still have to wait to see any major price declines, as a more significant slowing down of the housing market is expected to become more apparent only later on this year.
"Mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that had only just begun when April data were gathered," Lazzara said. "A more challenging macroeconomic environment may not support extraordinary home price growth for much longer."