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Case-Shiller: House Prices Keep Rising

Posted on September 6, 2017

House prices kept rising across the country this summer, according to the latest S&P CoreLogic Case-Shiller report.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.8% annual gain in June, up from 5.7% the previous month.

The 10-City Composite posted a 4.9% annual increase, down from 5.0% the previous month. The 20-City Composite reported a 5.7% year-over-year gain, the same as the previous month.

Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In June, Seattle led the way with a 13.4% year-over-year price increase, followed by Portland with 8.2%, and Dallas with a 7.7% increase.

Nine cities reported greater price increases in the year ending June 2017 versus the year ending May 2017.

"The trend of increasing home prices is continuing," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.”

Blitzer said the increases are supported by a tight housing market.

“Both the number of homes for sale and the number of days a house is on the market have declined for four to five years. Currently the months-supply of existing homes for sale is low, at 4.2 months. In addition, housing starts remain below their pre-financial crisis peak as new home sales have not recovered as fast as existing home sales," he said.

While these high prices are driving affordability down, other factors in the economy are softening the blow, somewhat. These include strong employment gains. With the unemployment rate at 4.4, the labor market is tightening, driving up wages salaries.

Mortgage rates have been dropping for two months, with the average 30-year fixed mortgage below 4% for the first time all year. This, too, helps people afford housing.

What’s needed is a big increase in housing inventory – particularly at the lower end of the price spectrum. Only a big increase in new construction will help with that. In the meantime, homebuyers face high prices and thin inventory.