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Price Gain of Houses May Speed Up Again

The price of houses in the United States are still gaining, however they haven’t been as much as they did in the past few years. In June, house prices rose 3.1% annually from a 3.3% annual gain in May, according to the S&P CoreLogic Case-Shiller national home price index. This also goes for the 10-City Composite annual increase at 1.8% from 2.2% in May, whereas the 20-City Composite is at 2.1% from 2.4% previously.

“Home price gains continue to trend down, but may be leveling off to a sustainable level,” S&P Dow Jones Indices’ Philip Murphy said. “Fewer cities (12) experienced lower YOY price gains than in May (13).”

Las Vegas, Phoenix and Tampa reportedly have the highest annual increase among 20 cities. With Phoenix at 5.8%, Las Vegas at 5.5%, and Tampa at 4.7% increase in June alone. More cities showed bigger increases in the year that ended in June comparing it from May. Among these, Seattle was the one city that show prices down at 1.3% from June 2018.

All of this sounds like good news but better be aware that the gain will most likely speed up from the low mortgage rates that have been going on. On average the 30-year fixed mortgage is now 1% lower than it was last year. This inevitably gives buyers the capability to purchase more houses which will then lead to creating higher prices.

“The U.S. National Home Price NSA Index YOY price change in June 2019 of 3.1% is exactly half of what it was in June 2018,” said Murphy. “While housing has clearly cooled off from 2018, home price gains in most cities remain positive in low single digits. Therefore, it is likely that current rates of change will generally be sustained barring an economic downturn”, he added.

Another read showed that prices from June of this year are up by 5% than that of last year. This measure came from Federal Housing Finance Agency which takes a look at home prices with loans from Fannie Mae and Freddie Mac (conforming loans). It doesn’t include the high end of the market. This shows that for five quarters the price gains have been lowering but it does not mean it will stay that way.

“We expect some positive effect of the mortgage interest rate decline on housing demand as well as home price appreciation given that rates have fallen a full percentage point since the end of 2018 to below 4% in August,” Lynn Fisher, FHFA’s senior advisor for economics, said. “This should lead to a longer summer buying season and potentially a higher rate of appreciation on a seasonally adjusted basis than would have previously been expected in the third quarter.”

Source: https://www.cnbc.com/2019/08/27/sp-case-shiller-june-2019.html

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Ela Denise Buendia

Ela Denise Buendia

Hey, thanks for taking a look at my article! I'm Ela, a very passionate creative writer and student. I am currently studying for a business degree. I love writing, and reading comes along with that. My other hobbies include: music, art, anime, and of course gaming.

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