U.S. home prices increased 0.6% in July compared with June, flying in the face of higher mortgage rates and driven by a severe lack of inventory, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.
The index’s 20-city composite – measuring home prices in the top 20 largest U.S. cities – saw a 0.9% increase compared with June while the 10-city composite saw an 0.8% increase.
Chicago, Cleveland and New York saw the highest home price gains among the 20 cities in July. Chicago remained in the top spot, with a 4.4% year-over-year price increase, while Cleveland saw a 4.0% increase and New York saw a 3.8% increase.
However, stark regional differences persist: In July, eight of the 20 cities reported lower prices and 12 of 20 reported higher prices.
“We have previously noted that home prices peaked in June 2022 and fell through January of 2023, declining by 5.0% in those seven months,” says Craig J. Lazzara, managing director at S&P DJI, in a statement. “The increase in prices that began in January has now erased the earlier decline, so that July represents a new all-time high for the National Composite.
“Moreover, this recovery in home prices is broadly based,” Lazzara says. “As was the case last month, 10 of the 20 cities in our sample have reached all-time high levels. In July, prices rose in all 20 cities after seasonal adjustment – and in 19 of them before adjustment.
“That said, regional differences continue to be striking,” he says. “On a year-over-year basis, the Revenge of the Rust Belt continues. The three best-performing metropolitan areas in July were Chicago (+4.4%), Cleveland (+4.0%), and New York (+3.8%), repeating the ranking we saw in May and June. The bottom of the leader board reshuffled somewhat, with Las Vegas (-7.2%) and Phoenix (-6.6%) this month’s worst performers.
“All of the cities at all-time highs are in the Eastern or Central time zones, and with two exceptions – Dallas and Tampa – all of the cities not at all-time highs are in the Pacific or Mountain time zones,” Lazzara adds. “The Midwest (+3.2%) continues as the nation’s strongest region, followed by the Northeast (+2.3%). The West (-3.8%) and Southwest (-3.6%) remain the weakest regions.
“Although the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results,” he concludes.
Photo: Tierra Mallorca