Rise in US home prices eases in May, remains below market consensus

Rise in home prices in the United States eased off during the month of May, remaining well below market expectations and compared to that in April. However, its continued rise is evident that the US housing market had its strongest spring since the recession.

The S&P CoreLogic Case-Shiller 20-City Composite index rose 5.2 percent year over year, versus expectations for a reading of 5.7 percent, marking a sequential slowdown from April's 5.4 percent increase. The group’s 10-city index gained 4.4 percent from a year earlier, down from 4.7 percent the prior month, and the 20-city index rose 5.2 percent y/y, below a 5.4 percent increase in April.

Moreover, the S&P/Case-Shiller US National Home Price Index, which measures all nine US census divisions, was up 5 percent in April from the previous year. Further, the most booming markets of the country continued to show double-digit growth figures with Portland, Ore, reporting a 12.5 percent y/y increase, Seattle showing a 10.7 percent gain and Denver climbing 9.5 percent.

Demand in the real estate sector fell 17 percent in June compared to a year ago period, posting the fifth consecutive month of decline. A report by the US Commerce Department showed that sales of newly-built homes rose strongly during the first half of 2016, supported by lower interest rates.

Meanwhile, sales of single-family homes rose 3.5 percent in June from a month earlier to a seasonally adjusted annual rate of 592,000, the agency said Tuesday. Moreover, new-home sales rose a healthy 10.1 percent during the first six months of 2016 compared with the same period a year earlier.