Continued demand for a low supply of homes helped send housing prices higher in August, according to data released Tuesday.
Home prices tracked by the national S&P CoreLogic Case-Shiller Home Price Index gained a seasonally adjusted 0.9% in August, leaving them 2.6% higher than a year prior. An index tracking prices in 20 of the nation’s large metropolitan areas similarly rose a seasonally adjusted 1% from the month prior, and was up 2.2% from one year ago.
The 20-city index result beat consensus estimates, which had called for a seasonally adjusted 0.6% gain from July and a 1.6% year-over-year increase.
The current unusual dynamic in the housing market—with both buyers and sellers pulling back as rates have risen—likely played a part in the strength of the August numbers. “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,” S&P Dow Jones Indices managing director Craig J. Lazzara said.
The average 30-year fixed mortgage rate passed 7% in August, according to weekly data from
Freddie Mac,
but has kept climbing since then. Last week, the average rate on a 30-year fixed-rate mortgage was 7.79%, its highest level in more than two decades and roughly half a percentage point above August’s highest weekly rate.
While mortgage rates’ climb above 7% has cut into sales, the impact hasn’t hit Case-Shiller’s measure of prices. “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.
Prices may be steady as rates have risen—but the data are based on relatively few transactions, Robert Frick, corporate economist at Navy Federal Credit Union, said following the release.
“Home sales are essentially frozen now, with few sales and low inventories, so prices aren’t representative of a properly functioning market,” Frick said. “It will take mortgage rates falling, hopefully by mid-year 2024, for some semblance of normalcy to return, and that should spur more inventory and lower prices.”
Write to Shaina Mishkin at [email protected]
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