‘Buyers balked’ at rising home prices as San Diego’s domestic market slowed in early spring

Prices in San Diego’s housing market eased slightly in early spring, according to a closely watched housing report released Tuesday.

Home prices rose 28.5% a year in April in metro San Diego, according to the S&P Case-Shiller indexes, from 29.6% the previous month – an 18-year high. It may not seem like a big difference, but it marks the first slowdown since October 2021.

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Additionally, the Case-Shiller indexes are lagging two months, signifying much of the slowdowns we’ve seen recently – an increase in the time it takes to sell a home and a drop in the price of resale single-family homes – have yet to hit the report.

San Diego wasn’t alone in experiencing minor slowdowns across much of the country. Nationwide home prices rose 20.4% from 20.6% the previous month. Soaring home prices in Florida were largely responsible for the 20-city report not reflecting much of an overall slowdown.

Tampa saw the biggest increase, with prices up 35.8% year-on-year, followed by Miami, up 33.3%. San Diego recorded the fifth highest increase in the report and remained the leader in price increases in California.

Zillow economist Nicole Bachaud said the index results reflected rising mortgage rates and more homes for sale as they remained on the market longer.

“April is likely the first month of this deceleration,” she wrote, “as buyers backed down from the cost of buying a home and pulled out of the market, slowing price growth “.

The interest rate for a 30-year fixed-rate mortgage was 4.98% in April, Freddie Mac reported, down from 3.06% the year before. It has increased considerably since then. As of Tuesday morning, it was 5.95%, Mortgage News Daily said.

In April, there were 3,324 homes for sale in San Diego County, the Redfin Data Center said. This was a big increase after dropping to the 2,000 home range at the start of the year and competition was fierce. Over the past four weeks, the number of homes for sale has risen to 4,187.

CoreLogic deputy chief economist Selma Hepp said April could be the first sign of further price deceleration. She said that as homes stay on the market longer, it means less competition and buyers don’t always have to make offers on list prices.

“There is an accumulation of overall active inventory as fewer buyers rush to make offers,” Hepp wrote, “resulting in an increase in the share of homes that have reduced their price from list price. initial”.

Only about 4% of homes listed in Metro San Diego — which includes all of San Diego County — saw a price reduction in April, Redfin said. In the past four weeks, that figure had risen to almost 8%. This is higher than the national average, at around 6% over the same period.

Case-Shiller indices are different from simply looking at the median house price. It takes into consideration repeat sales of identical single-family homes — and is seasonally adjusted — as they turn over the years. The median price for a resale single-family home in San Diego County in April was $950,000.

San Diego increases have outpaced other California markets every month since July 2019. In April, prices rose 22.9% in San Francisco and 23.4% in Los Angeles.

Minneapolis had the smallest increase in April with an annual gain of 12.3%. It was followed by Washington, DC, at 12.7%, and Chicago, at 13%.

San Diego’s gains, while substantial, have slowed relative to other parts of the country in 2022 and reflect a slowdown in the West while the Southeast has seen a substantial acceleration. San Diego’s 28.5 gain in April might show a slowdown, but it’s a huge difference from three years ago. In April 2019, prices in San Diego rose 0.8% year-on-year and are among the smallest gains in the country.

Craig J. Lazzara, managing director and global head of index investing strategy at S&P Dow Jones Indices, wrote that April’s gains were still historic for the index.

“We continue to see very strong housing market strength,” he wrote, “as all 20 cities recorded double-digit price increases for the 12 months ending April.”

However, Lazzara wrote that mortgage rates only started to rise significantly in April, so future reports may start to show more signs of a price slowdown.

“A tougher macroeconomic environment may not support extraordinary house price growth for much longer,” he wrote.

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S&P Case-Shiller Indices

Annual price growth in April 2022 by metropolitan area

Tampa: 35.8%

Miami: 33.3%

Phoenix: 31.3%

Dallas: 31.0%

San Diego: 28.5%

Vegas: 28.4%

Charlotte: 26.6%

Atlanta: 26.4%

Seattle: 26.1%

Denver: 23.6%

LA: 23.4%

San Francisco: 22.9%

Portland: 19.1%

Detroit: 15.3%

Boston: 15.1%

Cleveland: 14.5%

New York: 14.3%

Chicago: 13.0%

Washington: 12.7%

Minneapolis: 12.3%

Nationally: 20.4%