Despite COVID-19 Crisis, U.S. Home Prices Continued to Rise in June

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U.S. home prices continued to rise in June, despite the economic impact of the COVID-19 crisis.

However, the pace of home price appreciation slowed significantly.

According to the S&P CoreLogic Case-Shiller Indices, home prices increased a mere 0.2% on an adjusted basis in June compared with May and were up 4.3% compared with June 2019.

Month-over-month, the index’s 10-city composite – measuring growth in the top 10 largest U.S. cities – posted a decrease of 0.1% while the 20-city composite was flat compared with May.

Year-over-year, the 10-city composite increased 2.8% compared with June 2019, down from 3.0% in the previous month, while the 20-city composite increased 3.5%, down from 3.6% the previous month.

The report’s authors note that transaction records for March, April, May and June 2020 for Wayne County, Mich., are unavailable due to delays at the local recording office caused by the COVID-19 lockdown.

Phoenix, Seattle and Tampa continued to report the highest year-over-year gains among the 19 cities (excluding Detroit) in June.

Phoenix led the way with a 9.0% year-over-year price increase, followed by Seattle with a 6.5% increase and Tampa with a 5.9% increase.

Five of the 19 cities reported higher price increases in the year ending June 2020 versus the year ending May 2020.

On an unadjusted basis, U.S. home prices increased 0.6% month-over-month, while the 10-city and 20-city composites posted increases of 0.1% and 0.2% respectively.

“Housing prices were stable in June,” says Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, in a statement. “More data will be required to understand whether the market resumes its previous path of accelerating prices, continues to decelerate, or remains stable. That said, it’s important to bear in mind that deceleration is quite different from an environment in which prices actually fall.

“June’s gains were quite broad-based,” Lazzara adds. “Prices increased in all 19 cities for which we have data, accelerating in five of them. Phoenix retains the top spot for the 13th consecutive month, with a gain of nine percent for June. Home prices in Seattle rose by 6.5%, followed by Tampa at 5.9% and Charlotte at 5.7%. As has been the case for the last several months, prices were particularly strong in the Southeast and West, and comparatively weak in the Midwest and especially the Northeast.”

Selma Hepp, deputy chief economist for CoreLogic, says “an ideal confluence of demographic and home buying fundamentals” is what keeps “driving home prices higher.”

“On one hand, there’s a very limited supply of homes – and on the other, a strong millennial demand driven by record-low mortgage rates and a need for more space,” Hepp says in a separate statement. “But, the housing market also highlights the tale of two income stratums. In one group, there are those who lost their income and are relying on forbearance programs. In the other group, which fared better, individuals are able to purchase a home.”

Austin Niemiec, executive vice president for Quicken Loans Mortgage Services, says “Rising home prices means brokers should have a laser-like focus on educating first time homebuyers about what they can afford.”

“While buyers are likely to set their sights too high, and stretch their budget, they may also be surprised to learn just how far their budget can take them thanks to today’s low interest rates boosting their purchasing power,” Niemiec adds.

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