Home prices saw a 4.8% annual gain in July, according to the latest report from the S&P CoreLogic Case-Shiller Indices.
That’s up from June’s annual gain of 4.3%, with year-over-year gains accelerating in July after two months of staying essentially unchanged. July’s yearly increase represents the fastest rate of growth since November 2018, a jump reflecting what CoreLogic deputy chief economist Selma Hepp called a “perfect storm” in the housing market.
“Slow homebuying activity in April and May (critical months during home-buying season) while stay-at-home orders were in place, bounced back in July,” Hepp wrote on CoreLogic’s blog. “This [led] to a notable increase in the number of home purchase contracts signed and outpaced last July’s levels of home sales.
“Nevertheless, while buyers were coming out in droves, motivated by record-low mortgage rates and the need for more space, many sellers opted to not put their homes on the market, leading to historically low levels of for-sale inventory. The convergence of these factors allowed for home price growth to continue strong acceleration despite the economy facing continued uncertainty and high levels of unemployment.”
Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, indicated that there are early signals that prices may have begun a return to their pre-pandemic growth track.
“In previous months, we’ve noted that a trend of accelerating increases in the National Composite Index began in August 2019,” Lazzara said. “That trend was interrupted in May and June, as price gains decelerated modestly, but now may have resumed. Obviously more data will be required before we can say with confidence that any COVID-related deceleration is behind us.”
Month-to-month gains were also positive, with the index growing 0.8% from June.
Price growth in July was broad-based, with the Case-Shiller 10- and 20-City Composite indices both showing annual increases. The 10-City increase came in at 3.3% year over year (up from 2.8% in June), while the 20-City gain was at 3.9% (up from 3.5% in June). Home prices grew annually in all 19 cities for which the Case-Shiller Index had data; figures for Detroit remained unavailable due to issues relating to the ongoing COVID-19 pandemic.
Phoenix continued to lead the way among metros in year-over-year price gains, posting a 9.2% increase from July 2019. July marks the 14th straight month in which Phoenix’s home prices grew more than in any other metro. Seattle followed with a 7.0% price increase, with Charlotte in third at 6.0%. Sixteen of the 19 cities reported a higher price increase in the year ending July 2020 compared to the year ending June 2020.
“There was some growth even in the worst performing cities, Chicago (0.8%) and New York (1.3%),” observed Lazzara. “Prices were particularly strong in the Southeast and West regions, and comparatively weak in the Midwest and Northeast.”
“And while the 10-city index still lags slightly behind the 20-city index, July’s acceleration is an encouraging sign for cities that were COVID-19 hotspots and experienced relatively larger slowdown in the early months of the pandemic,” added Hepp. “The 10-city 3.31% increase is the sharpest increase since late December.”