U.S. home prices hit a record high in July, highlighting the affordability challenges buyers face despite a downward trend in mortgage rates.
The S&P Case-Shiller National Home Price Index rose 0.2% in July from a month earlier on a seasonally adjusted basis, unchanged from the monthly increase in June. It was the sixth consecutive monthly increase and an all-time record for the index.
On an annual basis, prices rose 5%, down from the 5.5% increase seen in June.
Learn more: When will real estate prices fall?
The index of home prices in the 20 largest metropolises rose 0.3% in July from June, lower than the 0.4% estimate by Bloomberg and the 0.5% in June. The index for the 20 cities jumped 5.9% from last July.
“Accounting for the seasonality of home purchases, we have seen 14 consecutive records in our national index,” Brian Luke, head of commodities, real assets and digital at S&P Dow Jones Indices, wrote in a statement.
“While the S&P 500 has hit 39 records and the S&P GSCI Gold TR has hit 35 records, the real estate sector is following a similar trajectory. This growth has come at a cost: all but two markets slowed last month, eight markets recorded monthly declines and the slowest annual growth nationally in 2024. Overall, the indices continue to grow at a pace above long-term averages after accounting for inflation.”
Accessibility challenges persist
New York City posted the largest annual gains of the 20 metropolitan areas tracked by Case-Shiller in July, with annual price increases of 8.8%. Las Vegas and Los Angeles followed with increases of 8.2% and 7.2%, respectively.
Tuesday’s report comes as mortgage rates hit their lowest level since February 2023 last week after the Fed began cutting interest rates.
Learn more: How the Federal Reserve’s Interest Rate Decision Affects Mortgage Rates
But buyers and sellers remain undecided about where the housing market is headed. High home prices, limited inventory and high rates have dampened sales activity. Some industry experts warn that more will be needed to unlock buyers’ appetite.
“I don’t think rates are low enough to really move the market. I think rates need to come down another 100 basis points to really spark interest,” Meredith Whitney, CEO of Meredith Whitney Advisory Group, told Yahoo Finance (video above).
And home prices need to fall “at least 15 percent” for housing costs to be sustainable, Whitney said.
Separate data from the National Association of Realtors showed the median home price rose 3.1% in August from a year earlier to $416,700, the 14th consecutive month of annual price increases.
Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
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