Home prices rose just 0.4% in May from the previous month, the Federal Housing Finance Agency reported Tuesday, continuing the rapid cool down in price appreciation in the housing market.
The FHFA House Price Index is calculated using home sales price information from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac.
From May 2013 to May 2014, house prices were up 5.5%. The U.S. index is 6.5% below its April 2007 peak and is roughly the same as the July 2005 index level.
While home-price increases have slowed, they are still trending higher, and have seen 26 months of consecutive year-over-year increases nationally. This puts U.S. home prices at just 12% off their 2006 peak.
At the same time, wages and household income have been stagnant.
Home sales across all price points are beginning to suffer, with stale demand moving from lower-priced homes to middle- and higher-priced homes as well, according to CoreLogic’s (CLGX) MarketPulse report for July.
CoreLogic’s Deputy Chief Economist Sam Khater said that this is a reflection of weakening home sales that originally began at lower-priced segments, but are now moving up the price continuum to the higher-priced segments.
“It is well known that higher-end home sales activity has been strong over the last two years, however, recently there’s been a shift, from both directions. Not only have higher-end home sales themselves started to weaken over the last few months, but the weakness in the lower-end segment is expanding into the upper-middle segments of the price distribution,” Khater said.
For the nine census divisions, seasonally adjusted monthly price changes from April 2014 to May 2014 ranged from -0.7% in the East South Central division to +1.1% in the West South Central division.
The 12-month changes were all positive ranging from +2.5% in the Middle Atlantic division to +9.6% in the Pacific division.
The April index value has been revised to reflect a 0.1% monthly price increase, above the original estimate of no change.