Driven by lack of inventory – and despite higher mortgage rates – U.S. home prices continued to increase in July, rising 0.4% compared with June and up 2.5% compared with July 2022, according to CoreLogic’s home price index report.
Of the 20 metros tracked in the report, Miami posted the highest year-over-year home price increase at 9%, followed by St. Louis at 4.8% and Detroit at 4.5%.
Among the states, Vermont ranked first for annual appreciation in July – up by 8.5% – followed by New Hampshire and New Jersey – both up by 7.3%.
Eleven states saw home prices decrease on an annual basis in July, ranging from a decrease of 5.7% in Idaho and a decrease of 0.3% in California.
“Annual home price growth regained momentum in July, which mostly reflects strong appreciation from earlier this year,” says Selma Hepp, chief economist for CoreLogic, in a statement. “That said, high mortgage rates have slowed additional price surges, with monthly increases returning to regular seasonal averages. In other words, home prices are still growing but are in line with historic seasonal expectations.
“Nevertheless, the projection of prolonged higher mortgage rates has dampened price forecasts over the next year, particularly in less-affordable markets,” Hepp continues. “But as there is still an extreme inventory shortage in the Western U.S., home prices in some of those markets should see relatively more upward pressure.”
The median sales price for a U.S. single-family home in July was $375,000, led by California at $700,000, the District of Columbia at $670,000 and Massachusetts at $590,000.
The annual reacceleration reflects six consecutive monthly gains, which drove prices about 5% higher compared to the February bottom, CoreLogic says in its report.
The 11 states that saw home price declines were all in the West, but since many of those markets continue to struggle with inventory shortages, that trend may be short-lived, and recent buyer competition will causes prices to heat up again.
CoreLogic projects that all states that saw year-over-year losses in July will begin posting gains by October of this year.
Currently, the firm forecasts that annual U.S. home price gains will increase 3.5% by July 2024.