Deep into the pandemic, prices for Seattle-area homes were still rising faster than any major city in the country, save Phoenix. There’s one sign, though, that the growth may be slowing.
Homes in the King, Pierce and Snohomish tri-county area saw average year-over-year price increases of 6.8% in May, according to the new release of the S&P CoreLogic Case-Shiller Home Price Index — the sixth consecutive month Seattle-area price growth has topped national averages. Phoenix saw 9% year-over-year price growth in May.
The index, which lags by two months, reports a three-month rolling average of home prices — meaning the numbers for May actually represent average home price gains since the onset of lockdown measures to control the pandemic in March.
Nationally, home prices rose an average of 4.5% compared to last year, growth S&P managing director Crag Lazzara called “stable.”
The trend of rising prices, though, may be slowing, he said.
“Although prices increased in May … they did so at a decelerating rate,” Lazzara said. At the city level, he said, there was a similar development: Prices increased in all 19 cities reporting data to Case-Shiller, but accelerated in only three. Compare that to last month, in which 12 cities saw accelerating month-over-month price growth, and 18 the month before that.
The Seattle area was one of the metros where growth decelerated; in April, prices rose 7.3%.
“More data will obviously be required in order to know whether May’s report represents a reversal of the previous path of accelerating prices or merely a slight deviation from an otherwise intact trend,” Lazzara said.
In the Seattle area, prices for the most affordable homes are still increasing the most rapidly. Prices for homes under $446,909 rose just under 10%, year-over-year, while prices for the most expensive homes — those over $667,808 — rose by close to 5% compared to last year. Prices for homes between those two points rose by roughly 7%.
Some industry watchers pointed to clouds on the horizon. Zillow economist Matthew Speakman, in a statement, expressed a measure of skepticism that the housing market could continue its upward climb amid “substantial risks” from the pandemic.
So far, an inventory crunch and historically low mortgage rates have kept home prices high. But “a resurgence in coronavirus case counts, and the broader economic uncertainty that accompanies it, poses new risks to the outlook for home prices, and seasonal factors should start to erode buyer demand,” Speakman said. “It’s likely that the housing market will feel the effects of this downturn at some point.”