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National home price growth slowed to its weakest pace in nearly a year this past May, highlighting a growing regional split in the U.S. housing market. While markets in the Midwest and Northeast continue to see strong appreciation, four major metropolitan areas—Dallas, Denver, San Francisco, and Tampa—now report annual price declines, according to the latest S&P CoreLogic Case-Shiller Index. This divergence is primarily driven by significant differences in housing inventory levels across the country.
Which Major Housing Markets Are Seeing Prices Decline? In May, home values in Dallas, Denver, San Francisco, and Tampa all fell compared to the same month last year. Tampa registered the most significant decline among the 20 cities tracked by the index, with a 2.4% drop, marking its seventh consecutive month of negative year-over-year growth. Denver and San Francisco both saw their first annual declines in nearly two years, while Dallas deepened losses that began in April. Other former high-flying markets also cooled considerably; price growth in Phoenix, Miami, and San Diego slowed to less than 1%, while Los Angeles saw a minimal 1.1% annual gain. This data suggests a clear softening in many Southern and Western markets that experienced rapid growth in recent years.
Where Are Home Prices Still Rising the Fastest? The top performers for price growth were exclusively in the Northeast and Midwest. New York led all cities with a 7.4% annual increase in May. Chicago and Detroit followed with robust gains of 6.1% and 4.9%, respectively. The sustained strength in these regions is largely attributed to a persistently low supply of homes for sale, which remains below pre-pandemic levels. This inventory scarcity continues to create competitive conditions that support upward pressure on prices, even as the national market cools.
What Is Driving the Widening Regional Gap in Housing? The key factor behind this regional divergence is the availability of homes for sale. Nationally, inventory levels have increased by 28.9% compared to the previous year. However, this growth is not uniform. Markets in the South and West are experiencing a notable rise in listings, leading to slower sales and softer pricing conditions. In contrast, the Northeast and Midwest have not seen the same inventory recovery, keeping supply tight and competition fierce. As noted by S&P Dow Jones Indices' Nicholas Godec, the national slowdown "reflects a market recalibrating around tighter financial conditions, subdued transaction volumes, and increasingly local dynamics." The S&P CoreLogic Case-Shiller Home Price Index is a widely respected measure of U.S. residential real estate prices, valued for its methodology that tracks repeat sales of the same properties to provide an accurate view of market trends.
Conclusion and Practical Takeaways The May data indicates that the U.S. housing market is normalizing at different speeds. For prospective buyers, this means market conditions are highly localized. Affordability and inventory levels vary dramatically by region, with more negotiating power potentially available in softening Southern and Western markets. For sellers, understanding local dynamics is crucial; pricing a home competitively is more important than ever. The national trend of slowing price growth is expected to continue, emphasizing the need to rely on hyper-local data rather than broad national headlines when making real estate decisions.
