[U.S. Housing Market Sees Signs of Stabilization as Prices Rise 3.1% in June]
The U.S. housing market is showing positive signs of stabilizing as home prices rose by 3.1% in June, according to two reports released on Tuesday. This upward trend indicates that the prolonged period of softening sales prices may finally be coming to an end.
Data from the Federal Housing Finance Agency revealed that home purchase prices increased by 3.1% year-over-year in June, surpassing the 2.9% rise reported in May. This marks the first pick-up in annual price growth since February 2022. Similarly, the S&P CoreLogic Case-Shiller national price index remained unchanged from the previous year in June, following declines in the preceding two months.
Both reports also indicated modest month-over-month price increases.
Over the past year, rising mortgage rates due to the Federal Reserve’s aggressive interest rate hikes have affected sales volumes, discouraging homeowners from selling their properties. The limited inventory of available homes has contributed to keeping prices high. However, the annual price growth has significantly moderated from the peak rates of around 20% observed in early 2022.
The Federal Housing Finance Agency reported a 3.0% increase in house prices between the second quarters of 2022 and 2023. Anju Vajja, principal associate director in the agency’s Division of Research and Statistics, attributed this growth to low inventory levels. She noted that while prices in several Western states continued to decline in a year-over-year comparison, house prices rose in all states on a quarter-over-quarter basis.
Craig Lazzara, managing director for S&P DJI, believes that these findings point toward a recovering housing market, even in the face of higher mortgage rates. The average interest rate for a 30-year mortgage has recently surpassed 7%, reaching the highest level in over two decades.
Lazzara stated, We recognize that the market’s gains could be affected by increases in mortgage rates or overall economic weakness, but the breadth and strength of this month’s report align with an optimistic view of future results.
According to FHFA’s data, the regions of East North Central and New England experienced the strongest year-over-year gains in June, with price increases of 5.4% and 6.8%, respectively. On a city level, the Case-Shiller data highlighted Chicago and Cleveland as the locations with the greatest price accelerations.
This positive data suggests that the U.S. housing market is in the process of stabilizing after a period of softening sales prices. While challenges such as rising mortgage rates and limited inventory persist, the gradual increase in home prices is a promising sign. As always, the market remains subject to various factors that can influence its trajectory, but for now, the outlook appears cautiously optimistic.
