San Diego home price gains slow; falls in nationwide rankings

San Diego home price gains were the highest in the nation for six months. Now, things have taken an uncharacteristic turn.

The San Diego metropolitan area’s home price increased 5.7 percent annually in August, said the S&P Case-Shiller Indices report released Tuesday. That made it No.7 in the 20-city index after months of domination.

San Diego metro, which includes all of San Diego County, had the first or second highest price gains for 11 months in the closely watched index. New York topped August’s list, up 8.1 percent in a year, followed by Las Vegas, up 7.3 percent.

America’s Finest City wasn’t alone in a slowdown. The nationwide annual increase was 4.3 percent, down from 4.8 percent the previous month.

“Home price growth is beginning to show signs of strain, recording the slowest annual gain since mortgage rates peaked in 2023,” wrote Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices.

The typical home price in the U.S. has increased more than 50 percent in five years, said Bright MLS Chief Economist Lisa Sturtevant, and rising mortgage rates over that time have made purchasing out of reach for many potential buyers.

“Housing costs have gone up much faster than incomes and, as a result, housing affordability is a growing challenge,” she said.

The Case-Shiller Indices track repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The median resale single-family home price in the San Diego metro was $985,000 in August.

Mortgage rates were at least dropping for potential buyers at the end of summer. In the last day of August, the average interest rate for a 30-year, fixed-rate mortgage was 6.35 percent, according to Freddie Mac, down from a high point of 7.22 percent this year in May.

Yet, there might be more struggles for buyers on the horizon. The average interest for a 30-year mortgage had hit 7.08 percent Tuesday morning, said Mortgage News Daily. There are some signs show it could already be affecting the market. The median time it takes a San Diego County home to sell was 28 days, said the Redfin Data Center, up from 14 to 16 days for most of the year.

The Los Angeles metro, which includes Orange and Los Angeles counties, was No.6 on the list, with annual price gains of 5.9 percent. The other California metro on the list, San Francisco, was up 2.8 percent annually in 14th place.

The bottom of the index nearly fell into negative territory. Denver was in last place, up 0.7 percent annually, followed by Portland at 0.8 percent.

Skylar Olsen, chief economist at Zillow, said things might be rough for buyers, but homeowners will likely see the value of their properties increase.

“As we near the slower fall months, buyers are likely to continue refusing steep pricing,” she said, “but sellers should continue to expect record high home equity, especially in the northern and southwestern swaths of the U.S.”

Annual price growth by metropolitan area

S&P/Case-Shiller Home Price Index, July 2024

New York: 8.1 percentLas Vegas: 7.3 percentChicago: 7.2 percentCleveland: 6.9 percentDetroit: 6.0 percentLos Angeles-Anaheim: 5.9 percentSan Diego: 5.7 percentBoston: 5.5 percentWashington, D.C.: 5.4 percentSeattle: 5.2 percentMiami: 5.1 percentCharlotte: 5.0 percentAtlanta: 3.7 percentSan Francisco: 2.8 percentPhoenix: 2.1 percentMinneapolis: 2 percentTampa: 1.7 percentDallas: 1.6 percentPortland: 0.8 percentDenver: 0.7 percentNational: 4.3 percent