Home prices hit new record in June Housing shortageThis is despite the fact that soaring mortgage rates continue to put homebuying out of reach for millions of Americans.
Nationwide prices rose 5.4% in June from a year earlier. S&P CoreLogic Case-Shiller Index Tuesday's figure was down from 5.9% the previous month.
On a monthly basis, prices rose 0.2%, according to the index.
“Upward pressures on home prices are making the housing market the most unaffordable it has ever been,” said Lisa Sturtevant, chief economist at Bright MLS. “First-time homebuyers and middle-income earners, in particular, are being left behind in the housing market.”
The composite index for 10 cities, including Los Angeles, Miami and New York, rose 7.4% from a year earlier, up from a 7.8% increase in May.
Composite home prices in the 20 cities tracked, which also include Dallas and Seattle, rose 6.5% from a year ago, down from 6.9% the previous month.
Prices rose in all 20 major metropolitan markets tracked by the index.
The biggest price increase occurred in New York, which recorded a 9% increase over the previous year.
This was followed by San Diego and Las Vegas with increases of 8.7% and 8.5%, respectively.
Portland, Oregon, again saw the lowest home price growth in June, with home prices up just 0.8% from a year ago.
The Case-Shiller Index is released with a two-month lag, so it may not reflect the latest market trends.
“Mortgage rates have been falling since June, but there is evidence that even lower rates are not enough to lure homebuyers back into the market,” Sturtevant said. “Some buyers are waiting for home prices to fall, not just interest rates.”
There are a variety of driving forces behind the rise in house prices.
Years of under-construction created a nationwide housing shortage, then soaring mortgage rates and rising costs of construction materials made the problem worse.
Rising mortgage rates over the past three years have also created a “golden handcuff” effect on the housing market.
Sellers who signed record-low mortgages at sub-3% interest rates at the start of the pandemic are reluctant to sell, further restricting supply and leaving few options for buyers eager to purchase.
Economists predict mortgage rates will remain high into 2024 and will only start to fall once the Federal Reserve starts cutting rates.
Still, interest rates are unlikely to return to the lowest levels seen during the pandemic.
