In April 2024, U.S. house prices reached new record highs, continuing the upward trend seen over the past year. Despite this, there are early indications that the market may be beginning to normalize. The pace of price increases has slowed, suggesting that the rapid growth experienced in previous months may be tapering off. This is evident in the slight monthly gains and the deceleration of year-over-year growth, pointing to a potential shift in the housing market's momentum.

The Federal Housing Finance Agency (FHFA) reported a 0.2% increase in house prices from March to April 2024, which fell short of the expected 0.3% growth. On an annual basis, prices rose 6.3%, down from 6.7% in March, further highlighting the slowdown. Across the nine census divisions, monthly price changes were mixed, ranging from a slight decrease in the West South Central and Middle Atlantic divisions to a 1.4% increase in the East South Central division. However, all divisions showed positive growth over the past 12 months, with the strongest gains in New England and the Middle Atlantic.

The S&P CoreLogic Case-Shiller Index, which tracks home prices in 20 major cities, also reflected this trend. The index recorded a 7.2% annual gain in April, down from 7.4% in March, marking the first slowdown in year-over-year growth. On a monthly basis, the index rose by 1.4%, a slight deceleration from the 1.6% increase in March. San Diego led the nation with the highest annual increase of 10.3%, followed by New York and Chicago, while Portland saw the smallest growth at 1.7%.

Economists offered varied perspectives on the housing market's performance. Brian D. Luke from S&P Dow Jones Indices noted that despite the slowdown, the market remains resilient, with many markets hitting all-time highs. He pointed out that 2024 has so far mirrored the strong start seen in the previous year, though he cautioned that a potential slowdown could occur in the summer and fall. On the other hand, Dr. Anju Vajja from the FHFA provided a more cautious outlook, suggesting that the market is beginning to show signs of normalization due to rising mortgage rates and increasing housing inventory.

The release of this housing data had little impact on real estate stocks, which failed to rally despite the positive numbers. Instead, hawkish comments from the Federal Reserve, which pushed Treasury yields higher, weighed on the market. This reaction suggests that investors may be more concerned about the broader economic outlook and the potential for higher interest rates, which could further impact the housing market in the coming months.

Source: https://www.benzinga.com/analyst-ratings/analyst-color/24/06/39482229/home-prices-reach-new-record-highs-yet-signs-of-normalization-emerge