Home prices saw another annual increase, according to the latest Case-Shiller Home Price Index from S&P Dow Jones Indices and CoreLogic.
The report’s results showed that June 2018 saw an increase of 6.2% for the year for home prices nationwide, but this is down from 6.4% from the previous month’s report. Average home prices for the top 10 metropolitan areas increased 6% and the 20-city composite saw a 6.3% year-over-year gain.
Before seasonal adjustment, the National Index increased 0.8% month-over-month in June. The 10-city composite increased 0.4% and the 20-city composite increased 0.5%. After seasonal adjustment, the National Index recorded a month-over-month gain of 0.3% in June.
The 10-city and 20-city composites both increased 0.1% month-over-month. Before seasonal adjustment, 19 of 20 cities reported increases, while 17 of 20 cities reported increases after the seasonal adjustment.
“Home prices continue to rise across the U.S.” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “However, even as home prices keep climbing, we are seeing signs that growth is easing in the housing market. Sales of both new and existing homes are roughly flat over the last six months amidst news stories of an increase in the number of homes for sale in some markets.”
Seattle, Las Vegas and San Francisco continue to have the highest year-over-year gains among all 20 cities. Las Vegas took the lead with a year-over-year price increase of 13%, Seattle saw a 12.8% price increase and San Francisco increased 10.7%.
Overall, six of the 20 cities reported greater price increases in the year ending June 2018 versus the previous month.
Blitzer added that both rising home prices and mortgage rates are affecting housing affordability.
“The west still leads the rise in home prices with Las Vegas displacing Seattle as the market with the fastest price increase,” he said. “Population and employment growth often drive homes prices. Las Vegas is among the fastest growing U.S. cities based on both employment and population, with its unemployment rate dropping below the national average in the last year. The northeast and mid-west are seeing smaller home price increases. Washington, Chicago and New York City showed the three slowest annual price gains among the 20 cities covered.”
Zillow Senior Economist Aaron Terrazas says it is hard to ignore the shifting climate in the housing market.
“It’s hard not to notice the winds beginning to shift in the housing market. But those changes have yet to reach the point where they’ve fully transitioned from home buyer headwinds into tailwinds, and likely won’t until at least the end of the decade,” Terrazas added. “Inventory, when it begins to rise, will be coming up from incredibly low levels. Home value growth remains well above historic norms, even as it slows in some markets – and that rapid growth still makes saving an adequate down payment a challenge for many buyers.”
Terrazas explained that homebuyers with tighter wallets will face the most competition in upcoming months.
“And while sellers are seemingly more open to cutting their initial asking price than in recent months, that trend is more prominent at the upper end of the market where there is more selection. Buyers at the lower end of the market, including many first-time buyers and buyers of limited means, will still face intense competition and a fast-moving, difficult environment,” Terrazas continued. “The truth is, we aren’t witnessing a rapid shift in market power, but rather a slowly unfolding evolution in which things are changing from extremely competitive for buyers to only somewhat competitive. Sellers, for now and for the foreseeable future, are still in control in this market.”