At the end of an extremely active spring home-buying season, the median price for a home posted an 18.6% increase, according to the S&P CoreLogic Case-Shiller Index.
The June increase came on the heels of a 16.8% rise in home prices in May, further adding to affordability challenges facing buyers.
Phoenix, San Diego, and Seattle reported the highest year-over-year gains among the 20 cities in the index in June. The median price in Phoenix was up nearly 30% over June 2020, while prices in San Diego were 27% higher. Seattle wasn’t far behind, with home prices rising 25%.
"June 2021 is the third consecutive month in which the growth rate of housing prices set a record," said Craig Lazzara, managing director at S&P DJI.
Lazzara says it was also the 13th straight month of accelerating home prices, with many of those months seeing double-digit price gains on a year-over-year basis.
"The last several months have been extraordinary not only in the level of price gains but in the consistency of gains across the country,” he said. “Home prices in 19 of our 20 cities now stand at all-time highs, as do the National Composite and both the 10- and 20-City indices.”
Supply and demand
A major factor driving those prices higher is an imbalance in supply and demand. Americans have been on the move since the COVID-19 pandemic began, with many heading for smaller cities because they could work remotely. At the same time, the number of available homes for sale continued to decline over the last 12 months.
The National Association of Realtors (NAR) reports that inventory levels improved in July, along with existing home sales. But there was no slowdown in home prices.
NAR reported that the median existing home price for all housing types in July was $359,900, up 17.8% from July 2020. Each region saw prices climb, and it was the 113th straight month of year-over-year gains.
"Although we shouldn't expect to see home prices drop in the coming months, there is a chance that they will level off as inventory continues to gradually improve," said Lawrence Yun, NAR’s chief economist.
In the meantime, Yun says some prospective buyers who are priced out of the housing market are increasing the demand for rental homes and thereby pushing up the rental rates.