U.S. home prices slipped in May, a move that some experts say could be an early sign the economy is in more trouble than it appears.
According to new data from the S&P CoreLogic Case-Shiller Index, home prices in the 20 largest metro areas fell 0.3% in May from the previous month.
That’s the first monthly drop in springtime since at least 2023 and marks the slowest year-over-year increase in nearly two years. Nationally, prices also fell 0.3%.
While prices are still up 2.8% over the past year in those 20 cities, that’s a notable cooldown compared to the nearly 8% growth seen just a year earlier, and far from the nearly 20% annual gains during the 2021 pandemic housing boom.
Spencer Hakimian, a hedge fund manager and founder of Tolou Capital Management, responded to the news on social media, posting, “US MAY HOME PRICES FALL 0.2% VS PREVIOUS MONTH. Housing prices do not fall in the spring. We are in a recession.”
Housing Market Feels the Strain of High Rates
Experts say this slowdown reflects deeper issues beyond seasonal patterns. Nicholas Godec of S&P Dow Jones Indices said, “May’s data continued the year’s slow unwind of price momentum,” adding that the market is recalibrating due to “tighter financial conditions, subdued transaction volumes, and increasingly local dynamics.”
Affordability remains a major challenge.
Heather Long, chief economist at Navy Federal Credit Union, noted that despite the dip, “most Americans are looking at the fact that the national Case-Shiller Index is up more than 55% since January 2020, not that prices have come down by a hair this spring.”
She added, “This summer is a buyer’s market, and that won’t change until mortgage rates are back near 6% again – or below.”
Some Cities Up, Others Down
New York saw the biggest year-over-year price gains in May at 7.4%, while Tampa experienced a 2.4% decline.
Other cities like San Francisco and Dallas also posted minor drops.
Overall, the Case-Shiller 20-city index showed the weakest growth since August 2023.
Meanwhile, inventory is climbing. Realtor.com data shows listings were up nearly 30% in June compared to last year, and 21% of homes had price cuts, the highest share for June since at least 2016.
Anthony Smith, senior economist at Realtor.com, said the market “shows signs of rebalancing,” with both buyers and sellers “gradually adjusting to a housing market defined by higher costs, slower sales, and more negotiating room for buyers.”
The question now is whether this shift is a temporary cooling or the start of a larger downturn. For now, some in finance are ringing the alarm.
“Housing prices do not fall in the spring,” Hakimian repeated. “We are in a recession.”