June 2018 marked the 74th consecutive month home prices have risen, according to the S&P CoreLogic Case Shiller National Home Price NSA Index.
With an average price increase of +6% across the country, the three cities with the largest y/y gains in June were Las Vegas at +13%, Seattle at +12.8% and San Francisco at +10.7%. Other cities with y/y price increases over +6% in June included Denver at +8.3%, Boston at 7.1%, Los Angeles at +7.4% and Phoenix at +7.2%.
In addition to the largest y/y gains, Las Vegas also had the largest seasonally adjusted month-to-month increase, +1.4%. Cleveland, Detroit and Minneapolis followed Las Vegas in their respective month-to-month increases.
David Blitzer, managing director and chairman of the Index Committee of the S&P Dow Jones Indices, said, “Population and employment growth often drive home prices. Las Vegas is among the fastest growing US cities based upon…its unemployment rate dropping below the national average last year.”
Q2 2018 marked the highest prices in starter homes since 2008, according to this same National Home Price NSA Index. Clearly, these prices form a high barrier to entering the market At these price levels, a typical first-time buyer would need to spend 23% of her/his income for a first home, an increase of 2% compared to Q1 2018.
Blitzer said, “…even as home prices keep climbing, we’re seeing signs that growth is easing in housing markets. Sales of both new and existing homes are roughly flat over the last six months amidst news stories of an increase in the number of homes for sale in some markets. Rising mortgage rates…from 4.0% to 4.5% since January…(and) the rise in home prices are affecting housing affordability.”
Washington DC, Chicago and New York City had the three slowest annual price gains among the 20 cities covered by the S&P CoreLogic Case Shiller Price Index.
Lastly, Blitzer said that June’s pace of sales was the slowest since 2016. The volume of new home sales hit an 8-month low in June, dropping -5.3% from May. Existing home sales fell for the third straight month.
This trend of a slower pace in sales played out in Southern California. The 22,706 home sold there was -15% lower than average sales numbers since 1988.
