NEW YORK CITY, New York: Despite its extensive growth, there are signs that the U.S. housing market started to cool as early as August, according to the S&P CoreLogic Case-Shiller Indices.
During August, house prices rose 19.8 percent year-over-year, which was the same as the previous month and the first time the annual rise did not increase since early 2020.
According to the indices, the 10-city composite annual increase was 18.6 percent, down from 19.2 percent in July, while the 20-city composite rose 19.7 percent year over year, down from 20 percent in the previous month. Still, prices in all cities covered remain at all-time highs.
“We have previously suggested that the strength of the U.S. housing market is being driven partly by a reaction to the COVID-19 pandemic, as potential buyers move from urban apartments to suburban homes,” said Craig Lazzara, of S&P DJI, as quoted by CNBC.
Of the top 20 cities with the highest year-over-year gains in August, Phoenix led the way with a 33.3 percent price increase, followed by San Diego at 26.2 percent, and Tampa with 25.9 percent.
Officials noted that a decrease in mortgage rates in July and August partially contributed to the price rises.
Meanwhile, Mortgage News Daily reported that the average rate on the popular 30-year fixed loan fell below 3 percent in July, staying constant until mid-September before beginning to rise sharply to the current 3.25 percent.
In the coming moths, increase in interest rates could further cool housing prices, but not significantly, as both homebuyer and investor demands are still high, and the supply of homes for sale, especially at the market’s lower end, remains very low.
“Persistently strong demand among traditional homebuyers has been amplified by an increase in demand among investors this summer,” noted Selma Hepp, deputy chief economist at CoreLogic, according to CNBC.