Home prices in the US hit record highs in July despite a foreboding economic climate and steep interest rates, according to the S&P CoreLogic Case-Schiller house price index, parent company S&P Dow Jones Indices reported on Tuesday.
The group’s National Home Price NSA Index crept up 1% year-on-year in July, while its 10-City Composite, which tracks major metropolitan areas, was up 0.9%. The 20-City Composite increased by 0.1%, with 19 of the cities reporting gains and 18 showing those increases accelerating compared to June.
All three indices were up from negative or zero growth as reported for the previous month.
Prices increased the most in Chicago, Cleveland and New York City, despite ongoing population exoduses from those urban centers. Chicago saw a whopping 4.4% price increase over last July despite losing 100,000 people in 2022 alone, while Cleveland, which only lost about 3,800 people in 2022, registered a 4% uptick.
New York City saw the third-highest price increase at 3.8%, despite hemorrhaging more than 468,200 people – 5.3% of its population – since the start of the Covid-19 pandemic.
Housing costs declined most in Las Vegas (down 7.2%) and Phoenix (down 6.6%), two population centers in an area that has been experiencing increasingly dire water shortages for years due to overdevelopment.
The Federal Housing Finance Agency’s latest report showed an even steeper increase in home prices for July, up 4.4% compared to July 2022. Last week, the National Association of Realtors (NAR) reported that prices were up in all four regions of the country despite a marked decline in sales, which dropped 15.3% in August compared to August 2022.
The NAR’s chief economist and other analysts have attempted to explain the continued price increases in the face of soaring interest rates and daunting recession indicators as the result of low inventory, arguing that families who already have mortgages are loath to sell their houses in the current market because their locked-in rates from when they bought their homes are so much lower than current interest rates.
Home prices will continue to increase, barring “general economic weakness” or further surges in mortgage rates, S&P DJI Managing Director Craig Lazzara explained in the company’s report, describing such an outlook as “optimistic.”
President Joe Biden has said he does not expect a recession on his watch, insisting the labor market is strong even as economists have acknowledged inflation is growing even faster than previously predicted.