The S&P CoreLogic Case-Shiller Indices are released each month. They are the gold standard for measuring U.S. home prices. July, the latest month reported, showed a national home price increase of 19.7% over the same month last year, a record in the 27 years that the study has been in existence.
[in-text-ad]
CoreLogic Deputy Chief Economist Selma Hepp commented:
Homebuyers across all ages continue to enjoy historically low mortgage rates, but have now also been joined by an influx of investor buyers over the summer. This continued high buyer demand has even outstripped the improvements in the supply of for-sale homes from the all-time lows experienced in the spring.
Fundamentally, this means many of the triggers for rising home rates this year remain unchanged. Mortgage rates have not risen (although government bond rates and inflation have). Incomes for Americans in the middle and upper classes were rarely hurt by the pandemic recession. The value of the assets held by many people has grown because of the stock market and improved home equity numbers. People continue to move from big coastal cities to ones inland with lower costs of living. The so-called work-from-home economy has allowed this.
The Case-Shiller figures by city show the surge in prices in the tier of cities below New York, Los Angeles and San Francisco. The authors wrote: “Phoenix led the way with a 32.4% year-over-year price increase, followed by San Diego with a 27.8% increase and Seattle with a 25.5% increase.”
The question going forward is whether this level of increase can continue. Several headwinds have already begun. Inflation may cause the Federal Reserve to increase rates, which eventually will spill over into the mortgage market. Builders, driven by high home prices and potential profits, will add inventory, which should push up supply to a tight market. The thousands of people who are relocating or plan to will start to dwindle.
Finally, a new slowdown in the economy, likely driven in part by another wave of COVID-19 infections, will affect how much people can pay for a new home.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
