Key Highlights
- July 2020 home prices up +5.5% compared to July 2019
- Home prices saw marked increase from 4.3% annual gain in June 2020, according to CoreLogic
- For first time in July, average rate on 30-year fixed mortgage fell -3%
The adjectives “exceptionally” and historically” pretty much describe the fastest home price growth since 2018…”exceptionally” high demand and “historically” low supply. “Record low” defined mortgage rates in July.
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Nationally, home prices were +5.5% higher in July 2020 than in July 2019. According to CoreLogic, this home price gain represented a “marked” increase from the +4.3% gain seen in June 2020.
Record low interest rates helped buyers counter these price increases in July. The average rate on the 30-year fixed mortgage was below 3%, the first time that average rate fell below 3% in any July ever.
Inventory, particularly inventory of low priced homes, continued to be down. According to the National Association of REALTORS® NAR), inventory for homes priced below $100,000 was down -32% in July whereas homes priced between $500,000-$750,000 was down -9%.
Frank Nothaft, CoreLogic’s chief economist, said, “Lower-priced homes are sought after and have had faster annual price growth than luxury growth. First-time buyers and investors are actively seeking lower-priced homes, and that segment of the housing market is in particularly short supply.”
CoreLogic economists predict that home prices will stay positive in 2021 but that price gains will weaken as buyer demand begins to weaken. Markets hit hard by the pandemic such as Las Vegas and Miami may be hurt the most. Additionally, CoreLogic expects there to be a surge in sales of distressed houses as mortgage bailout programs start to expire. Though a wealth of available distressed homes will be quickly snapped up, CoreLogic anticipates that such additional supply could dampen home price gains.
Home buying and home price gains, again according to CoreLogic’s latest Home Price Index, are strong in affordable rural and suburban areas. Nassau and Suffolk counties saw home price gains of +4.3% in July.
Washington DC saw home prices increase over +5% in July while San Francisco and New York, the two most expensive housing markets in the country that are also vulnerable to urban flight, saw home price gains of just less than 1% and just more than .4% respectively.
Thanks to CoreLogic and CNBC.
Also read: Home Sellers Realized +36.3% ROI in Q2 2020, Weekly Purchase Applications Recover as Rates Hit Record Low, Combining Hurricane Season with COVID-19
