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Strong demand from homebuyers in July, coupled with rock-bottom mortgage interest rates, led to a spike in home prices in major markets across the country.
Nationally, home prices rose 4.8% year-on-year in June, according to the S&P CoreLogic Case-Shiller US National Home Price Index.
The annual growth of 10-city composites increased by 3.3%, compared to 2.8% in the previous month. The 20-city composite is up 3.9% year-on-year, up from 3.5% in June. Detroit was not included in the series due to data collection issues, so it covered just 19 cities.
Phoenix, Seattle and Charlotte recorded the highest annual gains in 19 cities. Phoenix prices rose 9.2%, followed by 7% in Seattle, and Charlotte by 6%. Sixteen of the 19 cities reported higher price increases in the year ending in July 2020 versus the year ending in July 2020.
“In the past months, we noted that a trend in the national composite index started in August 2019. That trend was interrupted in May and June, as the price gains were marginally lower, but now again Can begin, ”Craig Lajara said. Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Index. “Clearly more data will be needed before we can say with confidence that any COVID-related slowdown is behind us.”
This index is actually a three-month average, so it covers prices from May, June and July. Recent data from others point to further strengthening of prices in August.
“Weekly home price figures show sellers are asking prices at double-digit speeds, and surprisingly, eager buyers are willing to give them up,” said Realtor.com chief economist Daniele Hale. “Looking ahead, we have seen double-digit price increases in August, so we expect to see another big jump in releases next month.”
Mortgage rates hit several new record lows in mid-summer and have not increased much since. These lower rates provide buyers with more purchasing power, and therefore lead to larger gains in home prices.
“The US housing market has been caught in a ‘perfect storm’ during the COVID-19 epidemic,” said Selma Hepp, deputy chief economist at CoreLogic. A substantial swing in demand led to record low mortgage rates and a wave of Millennials Driven by the need for indoor and outdoor space, those who were on the verge of buying – all are competing for fewer and fewer homes on the market. “