The growth in home prices finally stopped accelerating in August, in an early sign that this year’s wild ride for real estate prices might be slowing down.
Home prices in August were 19.8% above their level the same month in 2020, according to the S&P CoreLogic Case-Shiller Home Price Index, published Tuesday. That’s the same annual increase as in July and the first month since June 2020 that hasn’t shown faster year-over-year price growth than the previous month, as shown in the chart below.
Home prices have been driven sharply upward amid the pandemic. High buyer demand for space to accommodate work-from-home trends has run headlong into stubbornly low inventories of homes for sale, at the same time that relatively low mortgage rates have given shoppers more buying power. Prices, which have been severely hurting home affordability, have shown no sign of actually decreasing—they grew 1.2% compared to July, and the year-over-year increases the last two months are the highest on record going back to 1987—but the market just might be reaching its limits.
“The growth in housing prices, while still very strong, may be beginning to decelerate,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI, in a commentary.
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