Real estate agents Rosa Arrigo, center, and Elisa Rosen, right, work an open house in West Hempstead, New York on April 18, 2021.
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Home prices rose 18.6% annually in June, up from the 16.8% increase in May, according to the S&P CoreLogic Case-Shiller national home price index.
That is the largest annual gain in the history of the index dating back to 1987. Prices nationally are now 41% higher than their last peak during the housing boom in 2006.
Unlike other median price surveys, which can be skewed by the type of homes selling, this measures repeat sales of similar homes over time.
The 10-City composite rose 18.5%, up from 16.6% in the previous month. The 20-City composite was up 19.1%, up from 17.1% in the previous month.
Phoenix, San Diego, and Seattle reported the strongest price increases of the 20 cities. Prices in Phoenix increased 29.3% year-over-year. In San Diego they rose 27.1%, and in Seattle they were up 25.0%. All 20 cities reported higher price increases in the year ending June 2021 versus the year ending May 2021.
“The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI. “In June, all 20 cities rose, and all 20 gained more in the 12 months ended in June than they had gained in the 12 months ended in May.”
Prices in just about every city in the 20-city index, except for Chicago, are at all-time highs, he said, as are the national composition and the 10- and 20-city indices.
Home prices continue to surge due to strong demand and persistent low supply. While supply has been increasing month to month, it was still down 12% in July year-over-year, according to the National Association of Realtors.
Peter Boockvar, chief investment officer at Bleakley Advisory group, said prices are rising at “a really out of control pace that is unsustainable and unhealthy.”
Home sales, however, have started to cool. Signed contracts on existing homes dropped in July, according to the National Association of Realtors. Prices usually lag sales by about six months, so that could be a sign that price gains will stop accelerating as they have been for over a year.
“According to new Ally Home data, 45% of buyers say they have delayed purchasing a home due to market conditions, with 29% citing high home prices and 20% indicating homes selling too quickly as factors in this delay,” says Glenn Brunker, president of Ally Home.
Low mortgage rates continue to keep prices strong. Rates will rise if the Federal Reserve slows its purchases of mortgage-backed bonds, but so far that is not expected to happen in the near term.