Housing Market Thrives: America’s Property Prices Hit Historic Highs
What’s Driving the Surge in US House Prices? – Data from S&P CoreLogic Case-Shiller, the index responsible for tracking housing prices in the US by S&P Dow Jones Indices, reveals a 0.6% increase in July compared to June. This data also highlights that during July, 19 out of the 20 major metropolitan markets witnessed month-over-month price hikes.
Craig J. Lazzara, Managing Director at S&P DJI, commented on this trend, stating, “US home prices continued to rally in July 2023.” He noted that the National Composite rose by 0.6% in July, marking a 1.0% increase compared to the previous year. The 10- and 20-city composites also followed suit, showing slight increases from July 2022 levels.
Regional Insights: Winners and Losers – In the S&P CoreLogic Case-Shiller US National Home Price NSA Index, which encompasses all nine US census divisions, cities like Chicago (4.4%), Cleveland (4.0%), and New York (3.8%) reported the most substantial annual gains in July. Notably, these rankings mirrored those observed in May and June.
On the flip side, Las Vegas (-7.2%) and Phoenix (-6.6%) were among the poorest performers, experiencing declines in home prices.
Supply and Demand Dynamics – Danielle Hale, Chief Economist at Realtor.com, attributes the ongoing surge in home prices to a persistent supply-demand imbalance. Despite the fact that home purchase costs are consuming a significant portion of household incomes, the current housing supply continues to surpass buyer demand.
The Impact of Mortgage Rates – As mortgage rates began to creep up towards 7% in mid-July, many homeowners grew hesitant about listing their properties. According to Realtor.com’s data, the number of homes available for sale in August decreased by 7.9% compared to the previous year. This trend underscores how rising mortgage rates are influencing the behavior of both buyers and sellers in the US housing market.