The numbers: Home-price appreciation maintained a fast pace in July as buyers flooded the market only to find few homes for sale, according to a major price barometer released Tuesday.
The S&P CoreLogic Case-Shiller 20-city price index posted a 3.9% year-over-year gain in July, up from 3.5% the previous month. On a monthly basis, the index increased 0.6% between June and July.
What happened: The separate national index released with the report noted a 4.8% increase in home prices across the U.S. over the past year.
Phoenix once again lead all other markets nationwide with a 9.2% annual price gain in July, followed by Seattle with a 7% increase and Charlotte, N.C., with 6% growth.
“Prices were particularly strong in the Southeast and West regions, and comparatively weak in the Midwest and Northeast,” Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, wrote in the report.
Overall, the pace of price growth increased in 16 of the 19 cities Case-Shiller analyzed — the 20-city list did not include Detroit once again this month because transaction records for Wayne County, Mich. were unavailable, the report noted.
The big picture: The rise in home prices is the reflection of a “perfect storm,” according to
deputy chief economist Selma Hepp. “The substantial swing in demand is driven by a need for indoor and outdoor space met by record low mortgage rates and a wave of millennials who were on the verge of buying – all competing for fewer and fewer homes on the market,” Hepp said.
While the Case-Shiller index displays slightly more modest price-growth, other measures of home prices suggest that buyers are paying record amounts for properties across the country. Last week, the Federal Housing Finance Agency released its monthly home-price index. The FHFA report found that home prices had risen more than 2% between May and July, representing the largest two-month increase on record.
Rising prices might be a pain for buyers, but are good news for homeowners — especially those in forbearance. The uptick in prices contributes to the growing amount of equity owners have in their homes, which could become a lifeline for any buyers who ultimately decide to sell because they cannot afford their mortgage payments at the end of forbearance, Hepp said.
What they’re saying: “The pre-pandemic trend for home prices was one of moderate growth, and so far that is continuing. Based on demand measures for housing, it is clear that the negative forces unleashed by labor market turmoil have been substantially more than offset by the beneficial impact of record low mortgage rates and the positive effect of increased demand for single-family homes from those leaving cities in search of more space,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez, wrote in a research note.
Market reaction: The S&P 500 index
and the Dow Jones Industrial Average
both dipped in morning trading ahead of Tuesday evening’s presidential debate between President Donald Trump and Democratic nominee Joe Biden.