U.S. home price growth soared 19.7 percent in July, extending an unprecedented 14-month streak of increases and setting a new record for annual price growth, according to the S&P/Case-Shiller U.S. National Home Price Index.
Year over year, U.S. home prices surged 19.7 percent in July, up from 18.7 percent in June, tallying the highest rate of growth since Case-Shiller began recording the data in 1987, according to the data, released Tuesday. Home price growth among the top 20 biggest cities, meanwhile, rose 19.9 percent as low interest rates and a lack of available inventory continued to plague the housing market.
“Home price growth remained scorching hot as the housing market entered the dog days of summer, but data released in the weeks since indicate cooler days in the months to come,” Zillow economist Matthew Speakman said in a statement. “With mortgage rates still near historic lows, competition for the relatively few for-sale homes remain very stiff and home prices continue to rise sharply as a result.”
Phoenix, San Diego, and Seattle reported the highest year-over-year gains among America’s 20 biggest cities at 32.4, 27.8 and 25.5 percent growth, respectively. With a large number of professionals from California moving to the city, Phoenix is experiencing remarkable growth, and in the last month alone home prices grew by more than 3 percentage points.
While rapid price growth can be discouraging for first-time buyers, analysts predict the situation is beginning to turn around.
“The tight market conditions that have fueled the skyrocketing prices are finally showing signs of loosening,” Speakman said. “For-sale inventory levels charted their fourth consecutive monthly increase in August, and sellers appear to be taking a less aggressive approach when putting their homes on the market. Annual growth in list prices peaked in the spring and price cuts are becoming more common.”
The S&P/Case-Shiller U.S. National Home Price Index is “a composite of single-family home price indices that is calculated every month; the indices for the nine U.S. Census divisions are calculated using estimates of the aggregate value of single-family housing stock for the time period in question.”