By Scott Kanowsky
Investing.com -- Growth in American home prices slowed in May, signaling that a Federal Reserve-induced rise in mortgage rates may be weighing on demand.
U.S. home prices rose by 19.7% for the 12 months ended May, according to the latest S&P CoreLogic Case-Shiller index released on Tuesday. The reading was down from 20.6% in April.
The 20-city composite index showed home price growth dropped to 20.5% year-on-year from 21.2% in the prior month, while the 10-city version also came in slightly lower at 19.0%.
Tampa, Miami, and Dallas all reported the highest year-on-year gains. Tampa and Miami, in particular, saw prices jump by more than a third versus the previous year.
“Housing data for May 2022 continued strong, as price gains decelerated slightly from very high levels,” said Craig J. Lazzara, Managing Director at S&P Dow Jones Indices.
Lazzara added that mortgage financing, which has become more expensive as the Fed moves to ratchet up borrowing costs in a bid to stamp out soaring inflation, may also cool down the red-hot housing market.
"Accordingly, a more-challenging macroeconomic environment may not support extraordinary home price growth for much longer,” Lazzara said.
According to data from housing giant Freddie Mac (OTC:FMCC), the 30-year fixed rate mortgage stood at 5.54% last week, up sharply from 2.76% at the same time last year. Meanwhile, the 15-year mortgage rate was 4.75% from 2.63%.