Home Prices Spiked Again In August

Data released today shows home price gains improved in August both annually and month-over-month.

Year-over-year, prices rose 2.6%, up from 1% in July, according to the S&P CoreLogic Case-Shiller National Home Price NSA Index.

Prices were up 0.4% month-over-month before seasonal adjustment and 0.9% after. This is the seventh consecutive month of increases.

Home prices are now at all-time highs in the two composites and seven stand-alone cities, and prices rose in 19 of 20 cities after seasonal adjustment (13 of them before adjustment, as well). The National Composite surpassed its previous record high with this data.

Craig Lazzara, managing director at S&P DJI, noted that regional differences remain “substantial.”

“On a year-over-year basis, the three best-performing metropolitan areas in August were Chicago (+5.00%), New York (+4.98%), and Detroit (+4.8%). Chicago has topped the leaderboard for four consecutive months, and New York moved up this month to the silver medal position. The bottom of the rankings still has a western focus, with the worst performances coming from Las Vegas (-4.9%) and Phoenix (-3.9%),” he noted.

Strong jobs markets and relative affordability make the Northeast and Mid-Atlantic attractive to cost-sensitive buyers, pulling them away from pricey areas that were hot in the last few years.

Cities like Albany and Grand Rapids, MI, are seeing homes fly off the market in less than two weeks. Conversely, homes in Austin, TX, a former pandemic hotspot, are now taking two months to sell thanks to home price spikes in the last two years.

Prices are expected to stay elevated as stock shortages keep competition sizzling nationwide.

“The year’s increase in mortgage rates has surely suppressed housing demand, but after years of very low rates, it seems to have suppressed supply even more. Unless higher rates or other events lead to general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results,” Lazzara added.

The latest Federal Housing Finance Agency House Price Index shows the same trends, with July prices up 0.7% from July and 5.6% YOY.

“U.S. and regional house price gains remained strong over the last 12 months,” said Dr. Nataliya Polkovnichenko, Supervisory Economist in FHFA’s Division of Research and Statistics.

“The South Atlantic division showed moderate weakness in August, while the remaining census divisions posted positive price appreciation from the previous month.”