Home prices in America's 20 largest cities fell for the 3rd straight month in May (the latest data available from S&P CoreLogic's Case-Shiller data released this morning).

The 0.34% MoM drop matches the plunge in May and is equal to the largest drop since Dec 2022, dragging YoY price growth down to +2.79% (the weakest since Aug 2023)...

Source: Bloomberg

"National home prices were just 2.3% higher than a year ago, the smallest increase since July 2023, and nearly all of that gain occurred in the most recent six months," said Nicholas Godec, S&P Dow Jones Indices.

" The spring market lifted prices modestly, but not enough to suggest sustained acceleration."

Given the trend higher in (lagged) mortgage rates, the next couple of months do not bode well...

Source: Bloomberg

Home prices are now lower on a YoY basis in Denver, San Francisco, Dallas, and Tampa (-2.4% YoY)...

However, home price appreciation does seem to track very closely with bank reserves at The Fed (6mo lag), which implies prices are going continue to lag for the next couple of months before re-accelerating once again...

Source: Bloomberg

So 100bps of rate-cuts prompted a re-acceleration in home prices... and now prices are tumbling again as you pause... Well played Fed!!