Housing Prices Rose for Fifth Consecutive Month in June

A house is for sale in Arlington, Va., July 13, 2023. (Saul Loeb/AFP via Getty Images)

U.S. home prices rose again in June, for the fifth successive month, rising close to their all-time high from a year ago.

Housing costs rose 0.7 percent from May, after dropping 0.4 percent in April, according to the S&P CoreLogic Case-Shiller US National Home Price Index, which was published on Aug. 30.

A rapid surge in the 30-year mortgage rate over the past few weeks is complicating matters for potential homebuyers.

The average 30-year mortgage rate was at 7.54 percent on Aug. 28, according to Bankrate, down from 7.62 percent the week before and near its highest level in almost two decades.

Buyers Pushed Out of Market

The combination of higher mortgage payments and historically low housing stock has pushed many households looking to purchase out of the market.

“To put today’s affordability levels in perspective, it would take some combination of up to a 28% decline in home prices, a more than 4% reduction in 30-year mortgage rates, or up to a 60% growth in median household incomes to bring home affordability back to its 25-year average,” Andy Walden, vice president of enterprise research and strategy at Black Knight, told CNN last week.

According to Black Knight, 38.6 percent of median household income is required to make a monthly payment on the average home purchase, the worst measure since 1984.

U.S. home prices have risen 4.7 percent since the start of the year, slightly above the median annual increase in more than 35 years of recorded data, according to the S&P report.

“The recovery in home prices is broadly based,” said Craig Lazzara, Managing Director at S&P DJI.

“Our National Composite rose by 0.9% in June, and it now stands only -0.02% below its all-time peak from exactly one year ago.”

Home prices on the East Coast and in the Midwest have risen 1.6 and 2.8 percent, respectively, while those in the West have fallen by a year-over-year average of 5.9 percent.

For example, in June, Atlanta saw price gains of 2.1 percent, New York jumped 3.4 percent, and Cleveland rose 4.1 percent, while San Francisco fell 9.7 percent, Seattle lost 8.8 percent, and Las Vegas dropped 8.2 percent.

“The S&P CoreLogic Case-Shiller U.S. National Home Price Index for June showed mixed results,” Colin O'Leary, a salesperson at Berkshire Hathaway HomeServices Fillmore Real Estate, told The Epoch Times.

“As buyers adjust to higher interest rates, home prices are continuing to increase in many markets due to a lack of listing inventory,” he said.

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“Some markets are fairing better than others in the current high-interest rate environment.”

As a result, home purchase applications have dropped annually by 7 percent, to their lowest level in nearly 30 years, during the week ending Aug. 18, according to Redfin’s Homebuyer Demand Index.

Low Inventory

“Low housing supply is keeping home prices high in many markets, adding to the affordability hurdles buyers are facing,” said Joel Kan, MBA’s vice president and deputy chief economist.

A construction worker carries materials as he works on a home under construction at a housing development in Petaluma, Calif., on March 23, 2022. (Justin Sullivan/Getty Images)

Many homeowners are currently unwilling to sell their homes at existing mortgage rates after purchasing them at ultra-low average rates of 3 to 4 percent.

This factor has exasperated the existing housing shortage, pushing prices even higher for potential homebuyers.

“Many existing homeowners remain on the sidelines of the market, content to stay put as mortgage rates reach 20-year highs,” said Hannah Jones, an economic data analyst at Realtor.com.

“As a result, home shoppers are seeing fewer existing homes for sale and facing more competition for the homes available.”

To make up for the lack of existing housing, new constructions are needed to fill the gap, which rose again in July.

Ms. Jones said she remains cautious as affordability issues continue to weaken buyer demand.

“Limited home inventory, still-high prices and elevated mortgage rates meant that both new and existing home sales fell in June, though new home sales remained well above the previous year’s level,” she said.

Other buyers have turned to the rental market as a more affordable alternative as home prices remain high.

Renters have further benefited from a decrease in apartment prices nationwide in the last quarter, as a rise in new rental stock relieved price pressures, according to Realtor.com.