US Housing Market Makes a Comeback: Home Prices Rise in July and August
26 Sep 2023
With Price Increases in July and August, the US Home Market Rebounded.
The US housing market has experienced a significant turnaround in recent months, with home prices surpassing year-ago levels in July and August. This resurgence comes after a period of economic downturn and uncertainty, and experts are optimistic about the future of the housing market. In this article, we will delve into the factors contributing to this rebound and what it means for both buyers and sellers.
Understanding the Housing Market Trends
1. July’s Positive Indicator
In July, a crucial measure of housing market trends, the S&P CoreLogic Case-Shiller home price indices, revealed a 0.3% increase in home prices across 20 major metropolitan areas in the United States compared to the same month the previous year. This uptick marked the first positive movement since February and indicated a potential shift in the market.
2. A Gradual Recovery
While this increase is encouraging, it’s important to note that the index was still 1.2% below the record high achieved in June of the previous year. Nonetheless, the predicted positive showing of the 20-city index suggests a gradual recovery in property values.
3. Factors Contributing to the Decline
The decline in home prices, which began in late 2022, can be attributed to a sharp increase in mortgage rates during that period. This increase discouraged many sellers from listing their homes, causing property values to stagnate.
4. Recent Upward Momentum
Recent, albeit incomplete, data indicates that property prices have been on the rise for two consecutive months. However, it’s worth noting that the average 30-year fixed mortgage rate has surged to 7.19%, significantly higher than the sub-3% rates seen earlier in the housing crisis.
National Home Price Trends
5. National Overview
National home prices in July were 2.5% higher than they were in July of the previous year, according to data from CoreLogic’s independent home price index. This data was published approximately two weeks before the Case-Shiller report, reinforcing the positive momentum in the market.
6. Impact on Sales
While prices have been on the rise, the National Association of Realtors reported that the seasonally adjusted annual pace of existing home sales in August hit its lowest point since January. Despite this, median home prices have continued to increase, with the median house selling for $407,100 last month, a 3.9% increase compared to the previous year.
7. Mortgage Rate Influence
The surge in mortgage rates has undoubtedly had an impact on the market. Rates are currently much higher than they were a year ago, affecting the affordability of homes for potential buyers.
8. Uneven Price Growth
The housing market’s resurgence is not uniform across all regions. According to Case-Shiller data, some areas, such as San Francisco, Seattle, and Las Vegas, still experienced lower prices in June compared to the previous year. Conversely, cities like Chicago, Cleveland, and New York saw price increases compared to the same period.
In conclusion, the US housing market has shown signs of recovery with home prices rebounding in July and August. While there are positive indicators, it’s essential to consider the impact of high mortgage rates on affordability and the regional variations in price growth. Buyers and sellers alike should closely monitor these trends and make informed decisions in this evolving market.