Home prices hit a new record-high in July
US home prices rise again in July despite high mortgage rates
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Taylor Morrison CEO Sheryl Palmer discusses the headwinds facing the housing market after a drop in August existing home sales on 'The Claman Countdown.'
Home prices rose for the sixth consecutive month in July even as buyers continued to confront steep mortgage rates.
Prices increased 0.6% nationally in the period from June to July on a non-seasonally adjusted basis, the S&P CoreLogic Case-Shiller index showed Tuesday. On an annual basis, prices are up 1% from their peak in June 2022, according to the index.
"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," said Craig Lazzara, managing director at S&P DJI, in a release. "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."
The 10-city composite, which encompasses Los Angeles, Miami and New York, rose 0.9% annually, compared with a 0.5% decline in June. The 20-city composite, which also tracks housing prices in Dallas and Seattle, inched up 0.1% in July, which also marks an improvement from the 1.2% drop recorded the previous month.
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Homes in Rocklin, California, on Dec. 6, 2022. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
There was a major discrepancy in the price gains in the 20 cities: Chicago saw a 4.4% annual gain, making it the best-performing city for the third straight month. Cleveland, meanwhile, posted a 4% gain, followed by New York with an increase of 3.8%.
Eight of the 20 cities reported lower prices in July compared with the previous year.
On the other end of the spectrum, cities on the West Coast posted some of the biggest declines. Las Vegas prices plummeted 7.2%, edging out Phoenix with its 6.6% decline. San Francisco also saw a notable 6.2% decline in prices.
"Regional differences continue to be striking," Lazzara said. "On a year-over-year basis, the Revenge of the Rust Belt continues."
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The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest ongoings in the market.
The interest-rate-sensitive housing market entered a deep freeze last year in the wake of the Federal Reserve's aggressive interest-rate hike campaign.
But prices have quickly recovered as buyers adjust to higher mortgage rates and compete for a limited supply of homes.
A house is for sale in Arlington, Virginia, on July 13, 2023. (Photo by SAUL LOEB/AFP via Getty Images / Getty Images)
"Despite affordability concerns, stubborn inflation and stretched budgets from consumers, home prices continue to rise," said Nicole Bachaud, Zillow senior economist. "Low inventory has been much to blame for the sustained upward pressure on prices, and there are no signs pointing to significant inventory growth any time soon."
The problem is unlikely to be resolved anytime soon. With mortgage rates hovering near the highest level in two decades, sellers who locked in a low rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers.
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The number of available homes on the market at the end of July was down by more than 9% from the same time last year and down a stunning 46% from the typical amount before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com.