After dipping earlier in the year, home prices are moving higher again -- and that may be prompting some potential buyers to get off the sidelines.
The monthly S&P Dow Jones Indices for July show home prices rose 3.2 percent on a year-over-year basis. Phoenix, Las Vegas, and Charlotte showed the biggest gains in the 20-City Composite Index.
In July, the median home in Phoenix increased in value by 5.8 percent year-over-year, followed by Las Vegas with a 4.7 percent increase. Charlotte was close behind with a 4.6 percent increase in the median home price.
"Year-over-year home prices continued to gain, but at ever more modest rates," said Philip Murphy, managing director and global head of Index Governance at S&P Dow Jones Indices. "Charlotte surpassed Tampa to join the top three cities, and Seattle may be turning around from its recent negative streak of YOY price changes, improving from -1.3 percent in June to -0.06 percent in July.
Despite the uptick in home values, affordability may be slightly improved because mortgage interest rates have trended lower recently. Mortgage News Daily reported this week that the most prevalent rate for a 30-year fixed-rate mortgage this week is 3.75 percent.
The Mortgage Bankers Association reports that applications for new home purchases surged 33 percent in August
Rising prices and still-low mortgage rates may be sending more buyers into the market, according to a new survey from the National Association of Realtors (NAR). The group reports that more than half of the consumers it surveyed said now is a good time to buy a home.
“Mortgage rates are at historically low levels, so I see no sign of the optimism about home buying fading,” said NAR’s chief economist Lawrence Yun. “However, the fact that slightly fewer are expressing strong intensity compared to recent prior quarters is implying some would-be buyers have concerns about the direction of the economy.”
Broken down demographically older consumers -- those born between 1925 and 1945 -- were most likely to believe it’s a good time to buy. Boomers were almost as bullish on the housing market.
Sales have slowed in recent months, and a major reason, housing economists say, is current homeowners have been reluctant to move and therefore have hesitated to put their homes on the market.