Home prices continue to soar, as a dearth of inventory and a resilient economy help prop up demand for new homes in the face of affordability challenges, with the S&P CoreLogic Case-Shiller Index hitting another all-time high last month even as gains slow.
Nationally, home prices rose 5.9% year-over-year and 0.3% from May, and have gained 141% since the most recent low point in the housing market back in 2012.
“Recent performance remains encouraging,” said Brian D. Luke, senior director at S&P Dow Jones Indices, in a statement. “Our home price index has appreciated 4.1% year-to-date, the fastest start in two years.”
While existing homeowners remain well-positioned to benefit from equity gains, buyers on the outside looking in are still waiting for relief, as the long-term lack of housing inventory remains a problem with no easy solution. Some housing advocates have blamed regulation, while others have honed in on the larger affordability issue.
Dr. Lisa Sturtevant, chief economist for Bright MLS, said in a statement that affordability might end up weighing down home price gains sooner rather than later.
“With affordability a growing challenge for homebuyers and more new listings coming onto the market, we could be at the peak (for prices),” she said. “Home prices typically decline over the course of the second half of the year, but we may see a notably steeper seasonal decline this year.”
The latest data appears to indicate, however, that the housing market remains broadly on track to weather a bumpy pandemic recovery and continue rising in the medium-term, albeit at a slower pace than the recent pandemic boom.
“While annual gains have decelerated recently, this may have more to do with 2023 than 2024,” Luke said. “Covering the six-month period dating to when mortgage rates peaked, our national index has risen the past four months, erasing the stall experienced late last year.”
Also notable, as housing promises to be a key part of election year policy debates, red and blue states were in a “dead heat” to start the year, according to Luke, both averaging 5.9% gains over the last year.
Markets that wobbled during the pandemic are continuing to top the charts for price gains, with New York City, New York, and San Diego, California, coming in one-two for the biggest annual home price gains.
Every metro on the Case-Shiller 20-city composite, measuring home prices in specific metros across the country, came in positive for the sixth consecutive month—a strong streak, but still nothing like the pandemic boom.
“The last time we saw that long a streak was when all markets rose for three years consecutively during the COVID housing boom. This rally pales in comparison in both duration and annual gains,” Luke said.
For her part, Sturtevant said this current home price trend appears to be a much healthier one for both buyers and sellers, as buyers in particular impatiently await new inventory and relief on mortgage rates.
“There is no evidence to suggest that we will see a major home price drop nationally. While on the rise, the inventory of homes for sale is still low by historical standards,” she said. “Demand will increase this fall as mortgage rates come down. The housing market will be moving more toward a balanced market by the end of the year, which will be a welcome change for families and individuals hoping to buy.”
