Home price growth in some of the biggest markets in the U.S., including Miami, has increased at a continually slower annual rate. That has put the brakes on historic levels of price appreciation across the U.S., although low mortgage rates may be causing the trend to reverse yet again this summer.
In a July 2 report, Kate Seabaugh, senior researcher at John Burns Real Estate Consulting, called this recent trend “The Great Price Deceleration.” That’s because year-over-year price appreciation had suddenly reversed in many metros where home prices had been skyrocketing only a year ago. For example, between June 2018 and June 2019, price appreciation in San Jose went from a 20 percent average annual increase to a 6 percent average annual decrease — a 26 percent decrease in the rate of change, in other words.
Miami’s price deceleration was more modest, though also still close to the top of the ranking from John Burns Real Estate Consulting at a 6 percent slowdown. According to May home price data from CoreLogic, Miami prices increased at just a 1.6 percent annual rate. Miami is an outlier among major markets in the southern U.S., where price growth has remained relatively consistent over the last year. Price behavior has also been more restrained in the Northeast and Midwest, where home inventory is generally high relative to demand.
However, CoreLogic’s Home Price Index for May indicates that widespread negative price growth may now be reversing. The company’s nationwide HPI figure showed prices grew 3.6 percent year-over-year, marking an acceleration in price growth rates for the first time in 14 months. In other words, year-over-year price growth had been getting smaller each consecutive month since March 2018, according to CoreLogic data.
“Interest rates on fixed-rate mortgages fell by nearly one percentage point between November 2018 and this May. This has been a shot-in-the-arm for home sales,” said Dr. Frank Nothaft, chief economist at CoreLogic. Nothaft projects prices will grow another 0.8 percent to end June at all-time-high levels.
“The recent and forecasted acceleration in home prices is a good and bad thing at the same time,” said Frank Martell, president and CEO of CoreLogic. “Higher prices and a lack of affordable homes are two of the most challenging issues in housing today, and every buyer, seller and industry participant is being impacted.”