Even as mortgage rates rose, home prices hit an all-time high in the S&P CoreLogic Case-Shiller US National Home Price Index.
On a quarterly basis that ended in June, prices nationwide were 5.4 percent higher than in June 2023, according to data released Tuesday. Despite a record high for the index, the annual gain was smaller than May’s 5.9%.
The index’s 10-city composite rose 7.4% annually, up from 7.8% the previous month. The 20-city composite was 6.5% higher year-over-year, up from a 6.9% increase in May.
“While both housing and inflation have slowed, the gap between the two is wider than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index,” noted Brian Luke , S&P Dow’s head of commodities, real and digital assets. Jones Indices, in one edition. “That’s a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen more than 1,100% since 1974, but have slightly more than doubled (111%) after inflation.”
New York posted the highest annual gain among the 20 cities, with prices rising 9 percent in June, followed by San Diego and Las Vegas with annual increases of 8.7 percent and 8.5 percent, respectively. Portland, Oregon saw just a 0.8% annual gain in June, the smallest gain among the top cities.
Since housing affordability has been a major talking point this election cycle, this month’s report also broke down home values ​​by price bracket, dividing each city’s market into three tiers. Looking at just the major markets over the past five years, it found that 75% of the markets covered are showing low price levels that are rising faster than the overall market.
“For example, the lower end of the Atlanta market has risen 18% faster than the middle and upper end of the housing market,” Luke wrote in the release.
“New York’s low tier has its biggest five-year outperformance, rising nearly 20% above the overall New York area,” he continued. “New York also has the largest gap between low-end and high-end prices. In contrast, San Diego has seen the largest appreciation in higher-end homes over the past five years.”
Prices in the overall San Diego market are up 72% over the past five years, but the high end is up 79% versus 63% for the low end.
The price increase came even as mortgage rates rose sharply from April to June, the period averaged in the index. Usually when prices rise, prices cool.
The average 30-year fixed rate started April just below 7% and then jumped to 7.5% by the end of the month, according to Mortgage News Daily. Rates remained above 7% before falling back below that level in July. The 30-year fixed is now right around 6.5%.
“Mortgage rates have declined since June, but there are signs that even the rate cut hasn’t been enough to get buyers back into the market,” said Lisa Sturtevant, chief economist at Bright MLS. “Some buyers expect home prices to fall — not just interest rates,”
While home prices are expected to decline month-over-month after the fall due to seasonal factors and more inventory on the market, they are unlikely to decline significantly and are expected to remain higher than they were last fall.
