Welcome to Extreme Investor Network, your go-to source for all things business news! Today, we’re diving into the latest data on home prices in the U.S. and how they are impacting the market.
Despite rising mortgage interest rates, home prices have reached record levels on the S&P CoreLogic Case-Shiller U.S. National Home Price Index. According to data released recently, prices nationally were 5.4% higher on a three-month running average ended in June compared to the same time last year. While this marks a record high for the index, the annual gain was slightly lower than the previous month at 5.9%.
The index’s 10-city composite saw a 7.4% annual increase, down from 7.8% in the previous month, while the 20-city composite was 6.5% higher year over year, compared to a 6.9% increase in May.
What sets Extreme Investor Network apart is our in-depth analysis of the data. Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, pointed out that the gap between housing and inflation is wider than historical norms. The National Index currently averages 2.8% more than the Consumer Price Index, a full percentage point above the 50-year average.
New York led the way with the highest annual gain among the 20 cities, with prices increasing by 9% in June. San Diego and Las Vegas followed closely with annual increases of 8.7% and 8.5%, respectively. Conversely, Portland, Oregon only saw a 0.8% annual rise in June, the smallest gain among the top cities.
Our analysis also delves into how home values vary by price tier in different markets. Looking at large markets over the past five years, we found that the lower price tiers have been rising faster than the overall market in 75% of the markets covered.
Despite the increase in prices, mortgage rates have been rising as well. The average rate on the 30-year fixed started April just below 7% and peaked at 7.5% by the end of the month. Rates have since fallen, but there is still evidence that buyers are waiting for home prices to come down before entering the market.
As we head into the fall, home prices are expected to ease slightly due to seasonal factors and increased inventory. However, they are unlikely to drop significantly and are projected to remain higher than they were last fall.
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