US home prices notch new record high

Home prices are back up to a historic level, an unwelcome development for homebuyers already coping with elevated mortgage rates.

Prices rose 0.6 percent month-to-month in July, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. The monthly gain held firm both before and after seasonal adjustment.

From last June to this January, prices declined by 5 percent, a relief to would-be homebuyers contending with the shift in mortgage rates. Since the first month of the year, however, gains have virtually washed away those declines; the national composite reached an all-time high in July.

On an annual basis, the national index increased by 1 percent year-over-year in July. That can be considered modest, but prices were level year-over-year in June. The 10-City Composite and 20-City Composite both recorded annual increases after recording year-over-year decreases in June.

Zillow senior economist Nicole Bachaud said signals in the S&P report suggest prices will remain strong for the rest of the year, despite affordability concerns.

“Low inventory has been much to blame for the sustained upward pressure on prices, and there are no signs pointing to significant inventory growth any time soon,” Bachaud said in a statement.

Regional differences are stark. The Midwest posted a 3.2 percent annual price increase and the Northeast surged by 2.3 percent. On the other end, the Southwest dropped by 3.6 percent and the West fell even further, by 3.8 percent.

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National

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Chicago

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In May and June, the cities with the biggest price jumps were Chicago, Cleveland and New York, which proved to be the case again in July. Windy City prices rose 4.4 percent year-over-year, while Cleveland and New York prices increased by 4 percent and 3.8 percent, respectively.

Las Vegas and Phoenix, two cities that emerged as boomtowns during the pandemic, recorded annual price drops of 7.2 percent and 6.6 percent, respectively, the largest declines in S&P’s July report.

Craig Lazzara, managing director at S&P DJI, said general economic weakness and rising mortgage rates could malign the market, but added that the July report aligned with an optimistic view of housing price strength.