Housing prices hit a three-year high as sales drop off

by Kelly McCabe

Two new reports highlight the U.S. residential real estate market’s continuing balancing act.

First, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index showed that home prices are on the rise around the country, up 5.9 percent in July 2017 over July 2016 and up 5.8 percent from June, marking a three-year high.

“While home prices continue to rise, other housing indicators may be leveling off,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Down Jones Indices, referencing builders’ sentiment and sales. “The housing market will face two contradicting challenges during the rest of 2017 and into 2018. First, rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures. Second, the Fed’s recent move to shrink its balance sheet could push mortgage rates upward.”

The second, a report jointly released by the U.S. Census Bureau and Department of Housing and Urban Development, showed that sales of new homes dropped in August for the second consecutive month. There were 560,000 sales of new single-family homes in August, which marks the lowest rate for 2017, down 3.4 percent from July and 1.2 percent from August 2016.

While the S&P report showed that home prices were increasing overall, the latter report showed that the median prices for new homes dropped from $313,700 in July to $300,200 in August. The average price for the month was $368,100.

The market conditions reveal that overall inventory in the housing market is increasing, with a 6.1 months’ supply of homes available now. According to HousingWire, six months’ inventory is a midpoint that indicates it’s neither a buyer’s nor seller’s market.