Housing prices were back to flirting with historic highs in July, according to the latest reports. The S&P CoreLogic Case-Shiller U.S. National Home Price Index shows that U.S. home prices increased 0.9% since June 2023, rising for the sixth consecutive month and effectively canceling the 5.0% price decline we observed from June 2022 through January 2023. In year-over-year comparisons, property prices increased by 1.0%. “We have previously noted that home prices peaked in June 2022 and fell through January of 2023, declining by 5.0% in those seven months,” says Craig Lazzara, managing director at S&P Dow Jones Indices. “The increase in prices that began in January has now erased the earlier decline, so that July represents a new all-time high for the National Composite. Moreover, this recovery in home prices is broadly based.”
In a separate report, the Federal Housing Finance Agency (FHFA) indicated that home purchase prices rose 4.6% over the past year and were up 0.8% compared to the previous month, exceeding expectations. “U.S. house prices continued to appreciate in July, consistent with the trend observed over the last several months,” says Dr. Nataliya Polkovnichenko, supervisory economist in FHFA’s Division of Research and Statistics. “Regionally, all nine census divisions posted positive price appreciation over the last 12 months, although the Pacific and Mountain divisions experienced only modest growth.”
The reason behind this sharp increase lies in the lack of inventory during what is, in most of the country, peak selling season. With the weekly average rate on a fixed 30-year mortgage hovering around 7%, the highest level in over two decades, and high property prices, most homeowners in a position to do so opted to stay put rather than renouncing their relatively affordable mortgages, leading to an increase in sale prices as demand fast exceeded the available inventory in most of the country.
Regional Differences
However, not all regions fared the same. 10 of the 20 cities included in the Case-Shiller Index have reached all-time high levels. According to Lazzara, all of the cities at all-time highs are in Eastern and Central time zones while all of the cities not at all-time highs are in the Pacific and Mountain time zones, with the exception of Dallas and Tampa. “The Midwest (+3.2%) continues as the nation’s strongest region, followed by the Northeast (+2.3%),” he says. “The West (-3.8%) and Southwest (-3.6%) remain the weakest regions.” As was the case in previous months, Chicago (+4.4%), Cleveland (+4.0%), and New York (+3.8%) show the steepest year-over-year price gains. Meanwhile, cities that emerged as boomtowns during the pandemic, particularly Las Vegas (-7.2%) and Phoenix (-6.6%) are the worst performers.
The FHFA Index identifies the New England and Middle Atlantic areas as having the largest regional gains, with yearly price increases of 8.1% and 7.1%, respectively. On the other hand, the East South Central division trailed behind with a 0.1% increase.
“On a year-to-date basis, the National Composite has risen 5.3%, which is well above the median full calendar year increase in more than 35 years of data,” Lazzara says. “Although the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results.”
We’ll keep you updated on further developments. In the meantime, if you’d like more information about buying/selling or refinancing in today’s market, give us a call or drop us an email.
