U.S. home prices climb for fifth month amid tight inventory
From staff and wire reports
Home prices in the U.S. climbed for a fifth month as buyers competed for deals in the least affordable market in decades.
A national gauge of prices rose 0.7% in June from May, according to seasonally adjusted data from S&P CoreLogic Case-Shiller.
While rising mortgage rates have pushed some would-be home buyers to the sidelines, there’s still plenty of demand from determined shoppers, who are left to battle over a severely limited inventory of listings.
Elevated prices spurred by the supply crunch and higher borrowing costs have combined to make this the most-unaffordable housing market since 1984, according to Black Knight.
Tom Hormel, president of the Spokane Association of Realtors, said the comparison to 1984 was not a surprise.
“According to the newest U.S. Census data from 2021, median housing price was six-and-a-half times the median household income,” he said. “100% of that high price of homes stems back to just low inventory problems.”
Further, Hormel said homeowners who can afford more expensive homes haven’t budged because of higher interest rates.
“Some 30% of mortgage holders in the United States have an interest rate of 3% or less, so they’re not trading up,” he said. “If someone is selling a $400,000 home that is sitting at a 3% interest rate and wants to buy a $600,000 home at a 7.5% interest rate – that monthly payment has become untenable.”
“We’re creating an entire generation of renters,” he said this will have long term effects. “85% of people’s wealth is in their real estate and if you never allow them to get into that market, you really don’t help them build generational wealth.”
The average 30-year mortgage rate reached 6.79% in early June, according to data from Freddie Mac. It has since jumped to 7.23%, further squeezing buyers.
“We recognize that the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, but the breadth and strength of this month’s report are consistent with an optimistic view of future results,” said Craig Lazzara, managing director at S&P Dow Jones Indices.
On a year-over year basis, home prices nationally were flat.
More recent data from Redfin showed values for the four weeks through Aug. 6 climbed 3% from the same period in 2022.
Chicago, Cleveland and New York posted the biggest year-over-year gains of a 20-city measure in June.
Some of the worst-performing cities included Seattle, where prices fell 8.8% from a year earlier, and San Francisco, where prices dropped 9.7%.