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Home Prices Soar to New Heights in June on S&P Case-Shiller Index
The S&P CoreLogic Case-Shiller U.S. National Home Price Index has reached a record high, with a 5.4% annual gain for June 2024. This marks a significant milestone, despite a decelerating trend compared to the previous month's 5.9% annual gain. The index, which covers all nine U.S. census divisions, has been steadily increasing over the past year, with the 10-City Composite and 20-City Composite also posting substantial annual gains of 7.4% and 6.5%, respectively.
New York led the pack with a remarkable 9.0% annual increase, followed closely by San Diego and Las Vegas with annual gains of 8.7% and 8.5%, respectively. On the other end of the spectrum, Portland reported the smallest year-over-year growth at 0.8%. These regional disparities highlight the diverse nature of the U.S. housing market.
The surge in home prices is particularly noteworthy given the recent rise in mortgage interest rates. Typically, higher rates would lead to cooling prices, but the current market has defied this expectation. The average rate for a 30-year fixed mortgage began April at just under 7% and climbed to 7.75% by the end of the month, yet home prices continued to rise.
Brian Luke, Head of Commodities, Real & Digital Assets at S&P Jones Indices, noted that the gap between home prices and inflation is wider than historical norms. Since 1974, home prices have skyrocketed over 1,100% before factoring in inflation, but have only slightly more than doubled (111%) when adjusted for inflation. This disparity is a full percentage point above the 50-year average.
The report also highlighted the performance of different price tiers within each market. An analysis of major markets over the last five years revealed that 75% of these markets showed lower-priced segments appreciating faster than the overall market. For instance, the lower tier of the Atlanta market has appreciated 18% more rapidly than the middle and upper tiers. New York's lower tier demonstrated the most considerable year-over-year outperformance, rising nearly 20% above the overall New York area.
The resilience of the housing market is expected to continue, albeit with some seasonal adjustments. As autumn approaches, home prices are anticipated to ease month-to-month due to seasonal trends and increased inventory, but significant drops are unlikely, and prices are expected to remain higher than they were last fall.
Original Article: https://www.cnbc.com/2024/08/27/home-prices-hit-record-high-in-june-on-sp-case-shiller-index.html
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