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Home price growth approached the record highs of last summer as positive momentum rolled on for the fifth-straight month in June and nearly two dozen cities posted price increases, according to two new reports released Tuesday.
U.S. home prices rose 0.7 percent between May and June, the fifth-straight month of increases, according to the S&P CoreLogic Case-Shiller Index. Annually, prices were flat from June 2022, an improvement after decreasing by 0.4 percent annually in May, according to a national home price composite that now stands just 0.02 percent below an all-time record tallied in June 2022.
“With 2023 half over, the National Composite has risen 4.7%, which is slightly above the median full calendar year increase in more than 35 years of data,” S&P DJI Managing Director Craig Lazzara said in a statement. “We recognize that the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, but the breadth and strength of this month’s report are consistent with an optimistic view of future results.”
The Federal Housing Finance Agency’s House Price Index, meanwhile, said home prices rose 3 percent between the second quarters of 2022 and 2023, up 1.7 percent compared to the first quarter of 2023.
Lazzara noted that the gains in home prices are muted due to the steep rise in mortgage interest rates that have brought the housing market to a stalemate between buyers looking for inventory and would-be sellers who are reluctant to lose their lower interest rate — but predicted further growth in the future.
The prime driver of higher prices is the striking lack of inventory, which is driving up competition for the few homes on the market.
“High mortgage rates are still no match for very low inventory, making competition for what is on the market higher than it would be otherwise given the affordability constraints, and thus prices continue to inch up,” Zillow Senior Economist Nicole Bachaud said in a statement. “With new construction activity wavering and existing homeowners still feeling strongly about keeping their low mortgage rates, inventory will likely continue to play a role in keeping pressure on home prices throughout this year.”
CoreLogic Chief Economist Selma Hepp noted that the markets with the biggest price increases have been those that remained relatively affordable during the pandemic.
“Home price acceleration is most notable in markets that remained relatively affordable throughout the pandemic and that saw fewer shifts as a result of household migration, such as those in the Midwest and New England,” Hepp said. “Home prices in these markets are now catching up with traditionally more expensive ones.:
Indeed, CoreLogic data shows Cleveland and Chicago posted the nation’s largest monthly gains at 1.5 percent and 1.4 percent, while San Francisco, Denver and Tampa showed the smallest monthly gains, each charting an increase of less than 0.5 percent.
