Regional Variances in Home Price Appreciation
It is evident that the housing market is witnessing varying degrees of growth across different regions in the United States. While some areas are experiencing significant appreciation, others are showing signs of weakness.
Home Prices Increase Amid Housing Market Challenges
According to the FHFA index, home prices have risen 3.1% over the last year. Additionally, the agency reports a 3% increase in home prices between the second quarters of 2022 and 2023.
Persistent Inventory Woes Hamper Housing Market
Despite the rise in home prices, the housing market faces challenges due to inventory shortages. Homeowners, who have no urgent need to sell, are holding onto their properties, while buyers are left with a limited number of available listings.
Regional Differences Highlighted
Craig J. Lazzara, Managing Director at S&P DJI, emphasizes the striking regional differences in the housing market. On a year-over-year basis, the top-performing cities in June were Chicago (+4.2%), Cleveland (+4.1%), and New York (+3.4%). Conversely, the Pacific and Mountain time zones continue to experience the weakest performance.
Resilient Home Prices Despite Rising Interest Rates
Despite a significant increase in interest rates implemented by the Federal Reserve to curb inflation, home prices have remained stable. Lazzara acknowledges that future market gains may be impacted by rising mortgage rates or general economic weakness. However, he affirms that the breadth and strength of this month’s report reflect an optimistic outlook for future results.
Stock Market Rally
In response to the positive housing market news, U.S. stocks experienced an upturn in early trading on Tuesday. Notably, the yield on the 10-year Treasury note rose above 4.2%.