Home prices rose for the fifth straight month in June
Originally Published: 29 AUG 23 09:27 ET Updated: 29 AUG 23 10:56 ET By Anna Bahney, CNN
Washington, DC (CNN) — Home prices rose again in June, marking the fifth successive month of gains, and remaining near the all-time highs notched a year ago.
Prices rose 0.7% from the month before, according to seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index released Tuesday.
“The recovery in home prices is broadly based,” said Craig Lazzara, managing director at S&P DJI.
The national composite index was flat, year over year, after dropping 0.4% year over year in May. “It now stands only 0.02% below its all-time peak from exactly one year ago,” said Lazzara.
While home prices have remained strong in 2023, stubbornly high mortgage rates complicate the situation for potential homebuyers, said Selma Hepp, CoreLogic’s chief economist. That will likely keep price gains in check during the rest of the year, she added.
Home prices are expected to reaccelerate and reach a mid-single-digit growth rate by the end of the year, she said.
“Home price acceleration is most notable in markets that remained relatively affordable throughout the pandemic and saw less volatility from household migration, such as those in the Midwest and New England,” said Hepp. “Home prices in these markets are now catching up with more expensive ones.”
Cities with the most price appreciation in June, year over year, were Chicago, up 4.2%; Cleveland, up 4.1%; and New York, up 3.4%. The same three cities also saw the most appreciation in May.
At the other end of the spectrum, the cities with the largest price year-over-year drops in June were in the West. Home prices in San Francisco were down 9.7% from a year ago and Seattle prices fell by 8.8%.
The Midwest, where prices were up 2.8% in June from a year ago, continues to be the nation’s strongest region, followed by the Northeast, up 1.6%. The West, where prices are down 5.9% from a year ago, continues to see annual price declines.
Low inventory of homes pushing prices higher
The report showed the power of historically low inventory on home prices, which maintained strength despite ongoing affordability challenges, said Hannah Jones, economic data analyst at Realtor.com.
Low inventory is pushing prices higher because so few homeowners want to sell their home and give up their ultra-low mortgage rate of 3% or 4% to buy another home at 6% or 7%. The report tracks housing data from April, May and June. During that period, average rates for a 30-year, fixed-rate mortgage reached as high as 6.79%, according to Freddie Mac.
“Many existing homeowners remain on the sidelines of the market, content to stay put as mortgage rates reach 20-year highs,” said Jones. “As a result, home shoppers are seeing fewer existing homes for sale and facing more competition for the homes available.”
Builders have started to pick up construction activity to fill this gap, she said, but remain cautious as affordability challenges continue to stifle buyer demand.
“Limited home inventory, still-high prices and elevated mortgage rates meant that both new and existing home sales fell in June, though new home sales remained well above the previous year’s level,” said Jones.
The rental market could offer would-be buyers an affordable option as they save up for a home purchase. At a national level, rents have fallen annually for the last three months as increased rental inventory relieved some price pressure, according to Realtor.com.
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