US Home Prices Hit New Record Despite Market Slowdown
U.S. home prices reached a new all-time high in June, according to the latest S&P CoreLogic Case-Shiller Index report released Tuesday. The index showed a 5.4% annual increase, marking a slight deceleration from the previous month’s growth rate.
The S&P CoreLogic Case-Shiller U.S. National Home Price Index climbed to a fresh record, while the 20-City Composite index registered a year-over-year increase of 6.5% in June, down from May’s 6.9% gain.
Regionally, New York led the price surge with a 9% annual increase, followed closely by San Diego and Las Vegas at 8.7% and 8.5%, respectively.
Despite elevated mortgage rates hovering near 7% in June, which typically lead to price declines, a persistent lack of housing supply has kept prices buoyant. This combination of high prices and borrowing costs has effectively priced out many potential homebuyers.
The housing market has experienced a significant slowdown in recent months. The National Association of Realtors reported a 5.4% drop in existing home sales between May and June, though a slight improvement was noted with a 1.3% increase in July.
Construction activity has also been impacted, with U.S. housing starts hitting a four-year low in July as developers scaled back operations. Builder confidence reached a new low in August, primarily due to consumers being priced out of the market.
Despite these challenges, financial institutions remain optimistic about future price growth. Bank of America forecasts continued price momentum until at least 2026, with market appreciation expected to be 4.5% this year and 5% the next. Fitch Ratings similarly projects prices could rise up to 5% this year.
Experts suggest that price growth could accelerate once the Federal Reserve begins cutting interest rates. Since January, the Case-Shiller index has already gained 4.6%.
As the housing market continues to navigate through these complex dynamics, potential homebuyers and industry stakeholders alike will be closely monitoring these trends in the coming months.
