The numbers: The S&P CoreLogic Case-Shiller index of 20 cities slowed to a 20.5% year-over-year increase in May, from 21.2% the previous month.
In May, the 20-city index rose a seasonally adjusted 1.3%, down from 1.7% in April.
S&P said year-on-year growth in May was the second-highest in the 20-city index. April’s gain was the highest.
A separate report from the Federal Housing Finance Agency showed a monthly gain of 1.4%. And over the past year, the FHFA Index rose 18.3%
Key details: Tampa, Miami and Dallas posted the highest year-over-year gains among the 20 cities in May. Price growth was strongest in the South and Southeast, which experienced growth of 30.7%.
Minneapolis, Chicago and DC posted the lowest year-over-year gains, though those cities still saw home prices grow.
No city recorded price drops.
Big picture: Economists think the moderation in home price growth is the start of a new trend.
Housing affordability has fallen to its lowest level in 15 years, which should start to “restrain house price acceleration,” wrote Lou Crandall, chief economist at Wrightson ICAP, in a note before the publication of the data.
The cost of borrowing has risen dramatically since last year, with the average 30-year fixed rate at 5.54%, according to Freddie Mac. Last year, at the same time, this rate was 2.78%.
What the producers of the report said: Craig J. Lazzara, CEO of S&P DJI, said there was already evidence of a slowdown. May’s price gains exceeded April’s in just four cities. By February of this year, all 20 cities were accelerating, Lazzara said in a note accompanying the data.
Lazzara also warned that a more “difficult” environment “may not support extraordinary house price growth for much longer.”
What outside economists said: “In short, home prices rose less than expected in May … a slowdown in the monthly and annual pace is a move in the right direction,” he wrote in a note Rubeela Farooqi, US Chief Economist at High Frequency Economics. . “We expect that a combination of rising mortgage rates, which are affecting affordability and weighing on demand, and shrinking supply should help ease the pressure on prices over time.”
Market Reaction: Shares DJIA, -0.56% SPX, -1.07% will open lower on Tuesday following Walmart’s -8.02% profit warning. The yield on the 2.765% 10-year Treasury note TMUBMUSD10Y fell to 2.744%.