The S&P CoreLogic Case-Shiller U.S. National Home Price Index shows that house prices have hit an all-time high, despite rising mortgage interest rates.
Data released on Tuesday showed that prices nationwide were 5.4% higher in June 2023 compared to a three-month rolling average that ended in June. The index reached a new high, but the annual rise was less than May’s reading of 5.9%.
The 10-city composite of the index increased 7.4% yearly, decreasing from 7.8% in the preceding month. The 20-city composite had an increase in annual growth of 6.5%, compared to a 6.9% increase in May.
Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, stated in a statement that “while both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index.” That is higher above the 50-year average by a full percentage point. Home prices have increased by more than 1,100% since 1974 before accounting for inflation, although they have marginally increased (by 111%) after taking inflation into account.
Out of the 20 cities, New York had the largest yearly rise, with prices rising by 9% in June. San Diego and Las Vegas followed with gains of 8.7% and 8.5%, respectively. Portland, Oregon, had the lowest annual growth among the top cities in June, up just 0.8%.
In light of the fact that housing affordability has been a prominent topic of discussion during this election cycle, this month’s research also separated property values into three price categories according to each city’s market. When just big markets were considered over the previous five years, it was shown that 75% of the covered markets had low-price tiers growing more quickly than the market as a whole.
According to Luke’s statement in the release, “the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes.”
He went on, “The lowest tier in New York has the biggest five-year outperformance, rising nearly 20% above the entire New York region.” The biggest difference in pricing between low- and high-tier areas is likewise found in New York. On the other hand, during the last five years, San Diego has had the most increase in the value of higher-end properties.
Over the last five years, prices have increased 72% in the San Diego market overall, but only by 63% in the lower tier and 79% in the upper tier.
The period averaged on the index, April through June, had a substantial increase in mortgage rates, coinciding with the price increase. Prices often decrease when rates climb.
According to Mortgage News Daily, the 30-year fixed average rate began April at just less than 7% and soared to 7.5% by the end of the month. Before dropping below 7% once more in July, rates remained over that threshold. Right present, the 30-year fixed is around 6.5%.
Lisa Sturtevant, chief economist at Bright MLS, stated, “Mortgage rates have decreased since June, but there is evidence that even the decline in rates has not been enough to bring buyers back into the market.” “Some buyers are holding out for a decrease in home prices, not just in interest rates,”
Due to seasonal considerations and more availability on the market, house prices should soften month over month as fall approaches, but they are still predicted to be higher than they were in the previous fall.
