A sign is posted in front of a new home for sale at Hamilton Cottage in Novato, California on September 24, 2020.
Justin Sullivan | Getty Images
In the otherwise bright red housing market, there are signs that price increases can cool.
According to the S & P Core Logic Case-Shiller Index, prices in August were up 19.8% year-on-year, unchanged from the previous month. This is the first time that annual profits have not increased since early 2020.
The combined annual growth rate for the 10 cities was 18.6%, down from 19.2% in July. Complex facilities in 20 cities increased by 19.7% year-on-year, down from 20% in the previous month. Prices in all eligible cities are the highest ever.
Craig Lazara, Managing Director and Global Head of Index Investment, said: Strategy at S & PDJI. “August data also suggests that house price increases may still be very strong, but have begun to slow.”
Phoenix, San Diego and Tampa, Florida saw the highest year-over-year growth of the 20 cities in August. Phoenix took the lead with a 33.3% year-on-year increase, followed by San Diego with a 26.2% increase and Tampa with a 25.9% increase.
Eight of the 20 cities reported higher price increases in the year ended in August 2021 than in the year ended in July 2021.
Price increases were partially driven by lower mortgage rates in July and August. The average interest rate on the popular 30-year fixed loan fell below 3% in July and remained there until mid-September. Then, according to Mortgage News Daily, it started to rise sharply and is now around 3.25%. Higher interest rates may remove some of the heat of home prices in the coming months.
However, home prices are unlikely to fall significantly, as both homebuyer and investor demand remain high. The supply of homes for sale, especially at the bottom of the market, remains very sparse. During the summer there were some new supplies, but they are declining again.
Selma Hepp, Deputy Chief Economist at CoreLogic, said: “While strong home price growth is narrowing the pool of buyers, especially first-time buyers, the depth of supply-demand imbalances and strong demand among high-income earners will continue to push prices up.”
August Home Prices Suggest Cooling Potential: S & P Case-Shiller
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