Home prices continued to surge in May, but at a lower rate than what was seen in April, according to the latest S&P CoreLogic Case-Shiller home price index.
Real estate prices surged 19.7% annually in May, down from the 20.6% annual gain recorded for April, Case-Shiller’s U.S. National Home Price NSA index said. On a monthly basis, home prices increased 1.5% from April to May.
"Housing data for May 2022 continued strong, as price gains decelerated slightly from very high levels," Craig Lazzara, S&P Dow Jones Indices (DJI) managing director, said in a statement. "Despite this deceleration, growth rates are still extremely robust, with all three composites at or above the 98th percentile historically."
If you want to take advantage of your rising home equity in today's housing market, you could consider pulling money out of your home through a cash-out refinance. Visit Credible to find your personalized interest rate without affecting your credit score.
Here are the cities with the highest growth
When looking at the top 10 metro areas, house prices rose 19% annually in May, down from 19.6% in April, according to the home price index. When looking at the top 20 largest cities, prices rose 20.5% annually in May, also down from 21.2% in April.
Tampa, Miami and Dallas reported the strongest annual gains in May at 36.1%, 34% and 30.8%, respectively.
"The market’s strength continues to be broadly based, as all 20 cities recorded double-digit price increases for the 12 months ended in May," Lazzara said. "May’s gains ranked in the top quintile of historical experience for 19 cities, and in the top decile for 17 of them.
"However, at the city level we also see evidence of deceleration," he continued. "Price gains for May exceeded those for April in only four cities. As recently as February of this year, all 20 cities were accelerating."
You can take advantage of higher home values by pulling cash from your home through a cash-out refinance. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best rate for you.
Home price growth could moderate in the months ahead
Home prices have surged over the past year but this could begin to slow down soon, according to CoreLogic. It recently predicted that home prices will slow to an annual gain of 5% by May 2023 as rising mortgage rates and affordability challenges are expected to cool homebuyer demand.
"We’ve noted previously that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that was ongoing as our May data were gathered," Lazzara said. "Accordingly, a more challenging macroeconomic environment may not support extraordinary home price growth for much longer."
The Federal Reserve has raised interest rates four times this year. In July, the Fed raised rates by 75 basis points, marking the largest back-to-back increase in decades. The Fed also raised rates by 75 basis points in June. This will continue to raise mortgage rates, thereby impacting the demand for new homes.
If you want to tap your home equity before interest rates rise higher, you could consider taking out a cash-out refinance. To see if this is the right option for you, contact Credible to speak to a home loan expert and get your questions answered.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at firstname.lastname@example.org and your question might be answered by Credible in our Money Expert colum