Reports issued Tuesday morning indicate that the price of owning a slice of the American Dream has climbed for the fifth straight month. The latest S&P CoreLogic Case-Shiller index revealed a 0.9% national increase in home prices from May to June. Craig Lazzara, managing director at S&P DJI, confirmed, “June is the fifth consecutive month in which home prices have increased across the U.S.”
While the housing market faced significant freezes last year due to aggressive interest-rate hikes by the Federal Reserve, resilience is the new trend. Yet, this upswing doesn’t mean smooth sailing for aspiring homeowners. High mortgage rates continue to be a hurdle, with the most popular 30-year fixed mortgage rate surging to a two-decade high of 7.23%.
Home prices rose for the fifth consecutive month in June even as buyers continued to confront steep mortgage rates.
Bidenomics=You will own nothing and be happy!
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The Midwest and Northeast are seeing the steepest price increases. Cities like Chicago and Cleveland experienced 4.2% and 4.1% gains, respectively. In contrast, West Coast cities like San Francisco and Seattle are slumping, with home prices plunging by 9.7% and 8.8%. Lazzara states, “The Midwest continues as the nation’s strongest region, followed this month by the Northeast. The West remains the weakest region.”
One major factor fueling this steady rise is the limited supply of homes on the market. As Nicole Bachaud, Zillow senior economist, explained, “High mortgage rates are still no match for very low inventory.” Many homeowners who secured low mortgage rates before the pandemic are sitting tight, not eager to give up their affordable payments. This has resulted in an inventory down by more than 9% from the same time last year and a staggering 46% from pre-pandemic levels.
Home prices rose for fifth straight month in June despite high mortgage rates https://t.co/njGwzuPKJh #FoxBusiness
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Add to this the slow pace of new home construction. Builders have been cautious and hesitant to flood a market where mortgage rates might discourage buyers. Fewer homes mean higher prices, but higher prices could deter potential buyers, making it risky for builders to invest in new projects.
So, what does this mean for ordinary Americans seeking to own homes? Unfortunately, the pathway to homeownership is getting narrower. Stubbornly high mortgage rates and rising prices due to scarcity make it harder for average citizens to afford homes. Even renting is no easy escape. While rents have declined nationally in recent months, that trend is far from guaranteed to continue, especially as inflation picks up.
