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Home values are now falling in four major metro areas in the South and the West, highlighting regional weakness in those housing markets in comparison with the Midwest and North.
Dallas, Denver, San Francisco, and Tampa all registered annual declines in sales prices for single-family homes in May, according to data from the S&P CoreLogic Case-Shiller Index released on Tuesday.
Nationally, home values rose 2.3% in May compared with a year ago, the slowest annual growth pace since July 2023.
New York again reported the highest annual gain among the 20 cities tracked by the index, with a 7.4% increase in May. Chicago and Detroit followed with annual increases of 6.1% and 4.9%, respectively.
“With affordability still stretched and inventory constrained, national home prices are holding steady, but barely,” says Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices. “Seasonal momentum is proving weaker than usual, and the slowdown is now more than just a story of higher mortgage rates.”
Home prices reflect growing regional divergence
The latest Case-Shiller home price data reflects a growing regional divergence in the U.S. housing market, with the Midwest and Northeast still booming, and the South and West increasingly soft.
Los Angeles barely registered an annual price gain at 1.1%, while former COVID-19 boomtowns of Phoenix, Miami, and San Diego all registered growth of less than 1%.
Denver and San Francisco both registered their first annual declines in home values in nearly two years, while Dallas deepened its losses after turning negative in April.
Tampa again recorded the biggest annual price decline among the 20 cities tracked, falling 2.4% and marking the city’s seventh straight month of negative year-over-year growth.
Meanwhile, the top five metro areas for price growth in May were all located in the Northeast and Midwest, where the supply of homes for sale remains below pre-pandemic levels.
“National inventory levels are increasing, with the latest figure showing a 28.9% year-over-year increase,” says Realtor.com® senior economist Anthony Smith. “At the same time, regional housing dynamics are diverging: Inventory remains tight in the Northeast and Midwest, helping to support prices, while markets across the South and West are seeing more listings, slower sales, and softer pricing conditions.”
The May price data reflects another historically weak spring housing season, which put the country on track for a 30-year low in home transaction volume, according to estimates from the Realtor.com economic research team.
“The spring market lifted prices modestly, but not enough to suggest sustained acceleration,” says Godec. “May’s data continued the year’s slow unwind of price momentum, with annual gains narrowing for a fourth consecutive month.”
He adds that the national slowdown in price growth “reflects a market recalibrating around tighter financial conditions, subdued transaction volumes, and increasingly local dynamics.”
The Case-Shiller index reports on a two-month delay and reflects a three-month moving average. Homes usually go under contract a month or two before they close, so the May data reflects purchase decisions made earlier in the year.
Although the index’s price data is delayed by several months, it is considered one of the best available measures of changing home values, because it is based on repeat transactions on the same properties.