- Home prices continue to increase year-over-year, with a 13% annual gain in August.
- However, gains are slowing at a record-breaking pace, according to S&P CoreLogic Case-Shiller Index.
The latest S&P CoreLogic Case-Shiller Index was released this week.
You know what that means: headlines sure to terrify consumers in your market. Take a look:
While year-over-year price gains are still in the double-digits, the headlines all point to one piece of data: the difference in annual gains from July to August shows a record slowdown of home prices.
Here’s a breakdown of the S&P CoreLogic Case-Shiller Index and what it means for consumers in your market.
Year-over-year Home Price Gains
In August 2022, the Home Price index showed a 13% annual gain. This is down from a 15.6% annual gain in July.
The 2.6% difference in annual gains between July and August is the largest in the index’s history, dating back to 1987.
Two point six percent doesn’t seem alarming. When you hear it’s the largest gap month-to-month since 1987, it means there is significant downward pressure on the real estate industry. The Fed said as much a month ago. The numbers show that the pressure is large.
In addition, the Index’s 20-City Composite showed a 13.1% year-over-year gain, down from 16% in July.
Miami, Tampa, and Charlotte reported the highest year-over-year gains among the 20-city composite:
- Miami: 28.6% year-over-year price increase
- Tampa: 28% increase
- Charlotte: 21.3% increase
Even with year-over-year gains, all 20 cities reported lower annual price increases in August compared to July. Craig Lazzara, managing director at S&P DJI, wrote in a release:
The forceful deceleration in U.S. housing prices that we noted a month ago continued in our report for August 2022….Price gains decelerated in every one of our 20 cities. These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since.
Month-over-month Home Price Declines
All 20 cities on the composite reported declines before and after seasonal adjustments. Before the seasonal adjustment, the data shows a -1.1% month-over-month decrease in August. After the seasonal adjustment, the month-over-month decline is -0.9%.
The largest month-over-month declines occurred on the West Coast, where housing markets are some of the most expensive in the U.S.:
- San Francisco: -4.3 month-over-month decrease
- Seattle: -3.9 decrease
- San Diego: -2.8 decrease
Educate Consumers in Your Market
With mortgage rates climbing, home prices decelerating, and headlines comparing today’s market to the Great Recession, consumers are understandably concerned. You must be able to sort through the data and educate consumers to show them their options.
Shannon Gillette, founder of the Gillette Group in Phoenix, is seeing home depreciation in her market. Phoenix is cooling more rapidly than other markets, partly because it became such a hot spot during the pandemic.
As prices come down and sellers are more willing to offer incentives like covering buyer costs, Shannon states that education is more important now than ever.
It’s all about educating the consumer on the tools they have. The lock and shop options, the buy down….I tell my buyers, don’t be scared to send an offer. Now’s the time; there’s great opportunity.
As for sellers, there’s still plenty of opportunity as long as they work with the right agent and price their home right. Continually educate consumers—not just on new data—but also on what it means for buyers and sellers in your market.