Real estate agencies Rosa Arrigo, center, and Elisa Rosen, right, are working an open house in West Hempstead, New York, on April 18, 2021.
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House prices rose 18.6% year-on-year in June from 16.8% in May, according to the S&P CoreLogic Case-Shiller national house price index.
This is the largest annual gain in the index’s history dating back to 1987. Prices nationwide are now up 41% at their peak during the 2006 housing boom.
Unlike other average price surveys, which can be skewed by the type of homes they sell, this measures repeated sales of similar homes over time.
The compound of 10 cities increased by 18.5%, compared to 16.6% the previous month. The composite of 20 cities increased by 19.1%, compared to 17.1% the previous month.
Phoenix, San Diego and Seattle reported the strongest price increases in the 20 cities. Prices in Phoenix rose 29.3% year-over-year. In San Diego they increased by 27.1% and in Seattle they increased by 25.0%. The 20 cities recorded the highest price increases in the year ending June 2021 compared to the year ending May 2021.
“The last few months have been extraordinary not only in the level of price gains, but in the consistency of earnings across the country,” said Craig Lazzara, CEO and head of global S&P index investment strategy DJI. “In June, the 20 cities increased and the 20 earned more in the twelve months ending in June than they had gained in the twelve months ending in May.”
He said the prices of almost all the cities in the 20-city index, except Chicago, are all-time highs, as is the national composition and the 10- and 20-city indexes.
House prices continue to rise due to strong demand and persistent low supply. Although supply has been rising month by month, it was still down 12% year-on-year in July, according to the National Association of Realtors.
Peter Boockvar, investment director at Bleakley Advisory Group, said prices are rising “at a really out-of-control pace that is unsustainable and unhealthy.”
Still, home sales have begun to cool. Contracts signed on existing homes fell in July, according to the National Association of Realtors. Prices usually delay sales by about six months, so this could be a sign that price gains will stop accelerating as they have been for more than a year.
“According to new data from Ally Home, 45% of buyers say they have delayed buying a home due to market conditions, with 29% citing high prices and 20% indicating that homes they sell out too quickly as factors in this delay, ”says Glenn Brunker, president of Ally Home.
Low mortgage rates continue to keep prices strong. Rates will rise if the Federal Reserve slows down purchases of mortgage-backed bonds, but so far it is not expected to happen in the short term.