Home prices in the United States jumped a record high in June as buyers competed for a limited supply of available homes, the latest evidence that the housing market.
The S&P CoreLogic Case-Shiller Home Price Index in 20 cities rose 19.1% in June from a year earlier, the largest increase since 2000. Annual price increases in June were more high in the 20 cities than in May. . Prices are now at record highs in 19 of the 20 cities except Chicago.
âThe past few months have been extraordinary not only for the level of price gains, but also for the consistency of gains across the country,â said Craig Lazzara, managing director of index investment strategy at S&P DJI.
Prices rose the most in June in Phoenix, where they climbed 29.3% from the previous year, followed by San Diego, with an increase of 27.1%, and Seattle, by 25%.
The COVID-19 pandemic has pushed many Americans tothat offer more space and are not as crowded as apartments in large cities. Yet many other homeowners were reluctant to sell during the pandemic, and new home construction collapsed due to shortages of materials, land and labor.
That left just 1.32 million existing homes for sale in July, down 12% from the previous year. Still, there are signs that high prices are encouraging more people to sell, as the number of available homes rose in July compared to the previous month.
Increasingly “unaffordable” housing
Another challenge for potential buyers is competition from investors, including some Wall Street companies, who buy single-family homes for rent. There arefor sale today than a year ago, and the few homes available are increasingly going to cash-rich buyers or investors.
High-end buyers are bursting with cash, thanks to record stock prices and a strong recovery for professional workers, who were less likely to lose their jobs during the pandemic than working-class employees. Almost a quarter of all existing home sales in July were cash sales, up from 16% a year earlier. This pushes up house prices so that 4 out of 10 counties nationwide are known .
Many first-time buyers, who have fewer resources, findand must continue to rent.
There are signs that high prices are chilling sales a bit. Existing home sales rose 1.5% in July from a year earlier, a separate report from the National Association of Realtors showed last week. It’s a much slower pace than the month before. And the number of contracts signed to buy homes, a leading indicator of final sales, has declined for two consecutive months.
âAs real estate price growth has continued to explode, other data suggests a slowdown is on the horizon,â Sam Hall, assistant real estate economist at Capital Economics, said in a report. . Hall points to a 25% drop in mortgage applications, and statistics from Fannie Mae report that only 28% of households, the lowest in a decade, think it’s a good time to buy a home.