Home prices in America’s top 20 cities were expected to fall MoM for the 3rd straight month in April (the latest reported data from S&P Cotality Case-Shiller) and they did… but only marginally.

Prices fell 0.04% MoM in April (less than the 0.10% decline expected), but the annual change rose modestly from +0.88% YoY to +1.14% YoY…

Source: Bloomberg

“Monthly price movements show seasonal strength masking underlying softness,” said Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices.

The oddly tight coupling with Fed Reserves suggests the path is lower…

“Geographic dispersion remains pronounced,” Godec continued.

“Midwest and Northeast markets are still leading moderate growth, while many Sun Belt and Western metros see ongoing declines.

Chicago was again the strongest market with a 6.5% annual gain, trailed by New York (3.8%) and Cleveland (3.2%).

Seattle’s 2.3% year-over-year drop was the steepest in April, with Denver (-1.8%), Tampa (-1.8%), Dallas (-1.6%), and Phoenix (-1.7%) also among the notable decliners.

The nearly 9 percent performance spread between Chicago and Seattle highlights how localized housing trends remain.

On a YoY basis, Chicago reported the highest annual gain among the 20 cities with a 6.5% increase in April, followed by New York and Cleveland with annual increases of 3.8% and 3.2%, respectively.

Seattle posted the lowest return in April, falling 2.3%.

The chart below compares year-over-year returns for different housing price ranges (tiers) in Chicago.

“The affordability pinch remains a key headwind,” Godec concluded.

“After dipping below 6% earlier this year, 30-year mortgage rates climbed back to 6.3% in April, keeping financing costs elevated. In this higher-rate environment, home price growth remains constrained, with housing largely treading water in nominal terms and falling in real terms.”

Finally, with inflation accelerating to 3.8% in April, U.S. home values have now declined in real terms for an 11th straight month, further eroding inflation-adjusted housing wealth.