Home Prices Increased 19.7% from a Year Ago in July!

The latest edition of the S&P CoreLogic Case-Shiller Home Price Index showed that home prices increased 19.7% from a year ago in July, marking the fourth consecutive month of record growth in the more than 30-year history of the index.

“The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI, in the report.
The big picture: The fast pace of home-price appreciation the market is now seeing is sure to continue to draw comparisons to the housing bubble back in the early-to-mid 2000s that — when it burst — largely formed the basis for the Great Recession. But analysts warn that the situation is very different right now.

 

“This market is rooted in much different (and far less dangerous) fundamentals,” Robert Kavcic, senior economist at BMO Capital Markets, wrote in a research note.

 

The last housing bubble was driven by the subprime mortgage boom, but regulations imposed since then mean that lenders must ensure a borrower’s ability to pay back any loan they receive. Instead, this time home prices are rising because of the short supply of homes for sale across the country, which is increasing competition for properties amid high levels of demand.

What they’re saying: “While late summer indicators suggest some buyer fatigue, home-price growth is likely to remain in double digits through the remainder of 2021,” said CoreLogic deputy chief economist Selma Hepp.

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