Regional Divide Persists as Home Price Growth Edges Higher in May

By: Matthew Graham •

Home price appreciation remained modest in May, according to data from both FHFA and the S&P Cotality Case-Shiller Home Price Indices. Although both reports showed annual price growth improving slightly from April, appreciation continued to trail inflation, underscoring a housing market where elevated mortgage rates, affordability pressures, and uneven regional performance continue to limit broader price gains.

FHFA reported that U.S. house prices increased 0.3% on a seasonally adjusted basis in May, reversing April's 0.1% decline. On an annual basis, home prices were 2.2% higher than a year earlier, up slightly from the 2.0% pace reported in April. While the monthly rebound suggests prices remain resilient, annual appreciation continues to run well below the rapid gains seen during the post-pandemic housing boom.

Regional performance remained highly uneven. Among the nine census divisions, seasonally adjusted monthly price changes ranged from a 1.4% increase in the East South Central division to a 0.6% decline in the Pacific division. Looking over the past year, the Middle Atlantic division led the nation with 4.5% appreciation, while the Pacific division was the only region to post an annual decline at 0.3%, highlighting the widening gap between stronger Northeastern markets and softer conditions across much of the West.

The S&P Cotality Case-Shiller U.S. National Home Price Index reinforced the same broad narrative. The national index increased 1.1% from a year earlier in May, improving from April's 0.8% annual gain. The 10-City Composite rose 2.4% year over year, while the 20-City Composite posted a 1.6% increase, both reflecting slightly firmer appreciation in many of the nation's largest metropolitan areas.

Even with those modest improvements, Case-Shiller's annual gains remain well below year-ago levels, when the national index was increasing at more than twice its current pace. Combined with inflation that continues to outpace home price appreciation, the result is another month in which housing values declined in real, inflation-adjusted terms despite posting nominal gains.

Regional differences continued to define the market. Chicago recorded the strongest annual appreciation among the 20 tracked metropolitan areas for the third consecutive month with a 6.9% increase, followed by New York (4.2%) and Cleveland (3.1%). At the other end of the spectrum, Las Vegas posted the largest annual decline at 1.9%, while Seattle (1.8%), Denver (1.8%), and Tampa (1.6%) also remained in negative territory, illustrating the continued softness across several Western and Sun Belt markets.

FHFA House Price Index

  • May MoM (SA): +0.3%
  • YoY: +2.2%

S&P Cotality Case-Shiller Indices

  • U.S. National YoY: +1.1%
  • 10-City Composite YoY: +2.4%
  • 20-City Composite YoY: +1.6%
  • National MoM (SA): -0.05%
  • 10-City MoM (SA): +0.3%
  • 20-City MoM (SA): +0.1%