One key trend that has been having an impact on the summer for real estate agents is surging home prices, according to a recent survey by S&PCoreLogic Case-Shiller. In fact, home prices in some major markets are getting close to peak levels form before the housing crisis.
According to a report by Forbes, the S&P CoreLogic Case-Shiller reading on home prices in June showed more strong gains, although the pace of gains is slowing on a month-over-month basis. The 20-city index rose just 0.1 percent month-over-month, which is what economists had forecast.
The index has found that home prices are nearing levels that predate the housing crisis, with the May index at 97.1 percent of the pre-crisis peak in the survey.
Seattle paced the index with a year-over-year change of 13.4 percent and a month-over-month increase of 1.4 percent.
Other hot markets, and their year-over-year change, include Portland (8.2 percent); Dallas (7.7 percent); Denver (7.6 percent); Detroit 7.6 percent): and Las Vegas (7.3 percent).
According to David Blitzer, who runs the index committee at S&P Dow Jones Indices, the trend of increasing home prices is continuing.
“Price increases are supported by a tight housing market. Both the number of homes for sale and the number of days a house is on the market have declined for four to five years. Currently the months-supply of existing homes for sale is low, at 4.2 months. In addition, housing starts remain below their pre-financial crisis peak as new home sales have not recovered as fast as existing home sales.”
The rising prices are taking a toll on affordability, however, as they have grown far faster than wages. Low mortgage rates have helped keep homeownership within reach for many who might otherwise be priced out, but rates are expected to rebound from their historically low levels. Blitzer notes that the increase in price is a key factor that is holding affordability down.
“Wages and salaries are increasing, maintaining a growth rate a bit ahead of inflation. Mortgage rates, up slightly since the end of 2016, are under 4 percent. Given current economic conditions and the tight housing market, an immediate reversal in home price trends appears unlikely.”