Pace of U.S. home price appreciation decelerates in May, modest yet steady pace expected in 2017

The pace of U.S. home price appreciation decelerated in May, showed the data released on Tuesday. The FHFA purchase-only House Price Index rose 0.4 percent sequentially, coming in below the consensus expectations of 0.5 percent rise.

The S&P CoreLogic Case-Shiller 20-city Home Price Index also disappointed in May. It rose 0.1 percent sequentially, as compared with consensus expectations of 0.3 percent. Moreover, the prints for April were downwardly revised for both the indices.

The recent slowdown in home price appreciation might partially be explained by a rebound in housing inventories. However, the annual rate of home price appreciation continues to be strong and within the 5 percent and 6 percent range seen in 2015-2016. According to Barclays, a modest and stable pace of home price appreciation is expected this year.

Region wise, all regions expect Mountain and Middle Atlantic, saw flat or rising home prices. In the meantime, details in the S&P CoreLogic Case-Shiller Home Price Index report implies that regional momentum has decelerated. Out of 20 cities, just 14 cities saw growth in home prices in the past two months as compared with the widespread gains seen at the start of the year.

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