US house prices fell month-on-month for the first time in 9 yearsOn July 22, 2020 by Thomas Belayneh
Data released today by the Federal Housing Finance Agency showed house prices fell 0.3% from April to May, as Covid-19 shutdowns and stay-at-home orders made selling homes logistically difficult for homeowners. Consensus expectations were for a 0.3% growth in house prices.
Today’s announcement marks the first time the index has recorded a month-on-month contraction since the 0.2% decline in house prices witnessed in October 2011. May’s data is based on contracts for sale that were signed in late March/early April, which coincides with stay-at-home orders that were put in place by many states as the pandemic started to take hold.
Monthly house price growth has slowed significantly since the start of the year with January and February seeing 0.5% and 0.9% growth respectively, before falling to 0.1% growth for March and April. Concerningly, April’s estimate was revised down from 0.2% to 0.1%.
Although the number of transactions backing FHFA’s price index for May fell 30% and therefore could make May’s number less meaningful, the unemployment rate remains above 10% and is not supportive of any price growth whatsoever for the foreseeable future.
Mortgage applications and pending home sales did, however, rebound in May and this should allow for a more robust picture of the housing market in June’s report.
On a yearly basis, house prices are in fact up by 4.9% with the Mountain States (Arizona, Colorado etc) leading the way with growth at 6.3%, while the northeastern US region of New England saw the lowest year-on-year growth at 3.7%. New England was also the worst-performing region on a monthly basis, where house prices declined 1% in May.
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