Even as mortgage interest rates were rising, home prices reached the highest level ever on the S&P CoreLogic Case-Shiller U.S. National Home Price Index.<\/p>\n
On a three-month running average ended in June, prices nationally were 5.4% higher than they were in June 2023, according to data released Tuesday. Despite being a record high for the index, the annual gain was smaller than May\u2019s 5.9% reading.<\/p>\n
The index\u2019s 10-city composite rose 7.4% annually, down from 7.8% in the previous month. The 20-city composite was 6.5% higher year over year, down from a 6.9% increase in May.<\/p>\n
\u201cWhile 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,\u201d noted Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a release. \u201cThat is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation.\u201d<\/p>\n
New York saw the highest annual gain among the 20 cities, with prices climbing 9% in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively. Portland, Oregon, saw just a 0.8% annual rise in June, the smallest gain of the top cities.<\/p>\n
Since housing affordability has been a major talking point in this election cycle, this month\u2019s report also broke out home values by price tier, dividing each city\u2019s market into three tiers. Looking just at large markets over the past five years, it found that 75% of the markets covered show low-price tiers rising faster than the overall market.<\/p>\n
\u201cFor example, the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes,\u201d Luke wrote in the release.<\/p>\n
\u201cNew York\u2019s low tier has the largest five-year outperformance, rising nearly 20% above the overall New York region,\u201d he continued. \u201cNew York also has the largest divergence between low- and high-tier prices. Conversely, San Diego has seen the largest appreciation in higher-tier homes over the past five years.\u201d<\/p>\n
Prices in the overall San Diego market are up 72% in the past five years, but the high tier is up 79% versus 63% for the lower tier.<\/p>\n
The increase in prices came even as mortgage rates rose sharply from April through June, which is the period averaged on the index. Usually when rates rise, prices cool.<\/p>\n
The average rate on the 30-year fixed started April just below 7% and then shot up to 7.5% by the end of the month, according to Mortgage News Daily. Rates stayed over 7% before falling back under that level in July. The 30-year fixed is now right around 6.5%.<\/p>\n
\u201cMortgage rates have fallen since June, but there is evidence that even the decline in rates has not been enough to bring buyers back into the market,\u201d said Lisa Sturtevant, chief economist at Bright MLS. \u201cSome buyers are waiting for home prices \u2014 and not just interest rates \u2014 to come down,\u201d<\/p>\n
While home prices should ease month to month going into the fall, due to seasonal factors and more inventory on the market, they are unlikely to drop significantly, and are expected to still be higher than they were last fall.<\/p>\n<\/p>\n
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