A Perfect Storm Keeps Pushing Home Prices Up
If you are thinking about buying a house, you may want to get going on it. A perfect storm of conditions are causing prices to skyrocket and inventory to disappear.
Home prices rose 4.3% in June, just as they did in May, according to the Case-Schiller US National Price index, released on Tuesday. The Case-Schiller index, for those who are not familiar, measures the average price of a home in major metropolitan areas across the United States.
The index’s 10 City Composite grew 2.8% year over year, after rising 3.0% in May. The 20 City Composite picked up by 3.5% yearly. Phoenix led the rise in prices, gaining 9% since last year. Seattle followed, with prices growing by 6.5%, and Tampa rounded out the top three, with home prices jumping by 5.9% since June 2019. It should be noted that, due to a reporting issue, Detroit was not included in the 20 City Index this month. The 20 City Composite was actually a 19 City Composite this time around.
Even with prices on the rise, homes are getting snatched up. Existing home sales jumped 24.7% from June to July – that’s 5.86 million homes, seasonally adjusted. And a report from the Federal Housing Finance Agency, also released on Tuesday, shows home prices gaining 5.7% annually in June.
It’s safe to say that sales have recovered from their trough in March and April. A National Association of Realtors report showed that inventory at the end of July fell by 21% yearly. Home inventory is now at a 3.1 month supply, after falling from a 3.9 month supply in June and 4.2 month supply one year ago, in July 2019.
There’s a few factors at play here. The decrease in supply is inflating prices, businesses are reopening, giving consumers more confidence, and record low interest rates are pushing up demand. In addition, Covid is enticing more people to get out of apartments and other close dwellings, and move into single family homes.
Last week, we reported that a National Association of Homebuilders survey reached a new high in August.
