Home price growth accelerated to 1.9% in July, fueled by tight supply in the Midwest and Northeast against the backdrop of regional divides.
National growth in home values continued to pick up speed in July, building on June's performance and further bolstered by sustained demand in supply-constrained markets.
The value of single-family homes as measured by repeat transactions saw a 1.9% year-over-year increase in July compared to a year ago, up from an upwardly revised 1.6% annual increase the month prior, according to data from the S&P Cotality Case-Shiller Index released Tuesday.
Across the 20 cities tracked by the index, Chicago led the nation for the fifth consecutive month with a 6.9% annual gain, holding steady from June. New York followed with a year-over-year increase of 5.8%, up from 4.8% the previous month, while Cleveland came in third, recording a gain of 4.2%, up from 4.1% in June.
However, while nominal home values accelerated nationally, they fell in real terms for the 14th consecutive month, as July’s 3.4% inflation rate ran roughly 1.5 percentage points above the 1.9% home price gain.
Rebecca Kaufman, associate director of commodities at S&P Dow Jones Indices, says the latest data reflects a silver lining.
"Slightly lower inflation and stronger nominal home price appreciation helped narrow the gap," notes Kaufman.
A stubborn regional divide
The July report underscores a stark regional split in home price trends. Seattle posted the nation's steepest annual decline for the second straight month, shedding 1.6%, followed by Las Vegas (-1.3%), and Denver (-1.1%).
"The years-long East-West divide persists, with six out of the eight Eastern metropolitan markets
recording greater year-over-year changes in July versus June, compared with just two of the eight
Western metropolitan markets," says Kaufman.
As in June, a gap of nearly 9 percentage points separated the strongest housing market, defined by a tight resale supply, from the weakest in July.
Realtor.com® senior economist Anthony Smith notes that the July index reflects sales closing from May through July, a period when mortgage rates held in the mid-6% range, as renewed tensions tied to the Iran war kept energy prices and Treasury yields elevated.
During the same period, housing activity showed signs of strain, with existing-home sales slipping 2% in August to a 3.98 million annual pace, down 1.2% from a year ago, snapping a run of annual gains.
Pending home sales fell 2.3% in July before edging up 0.3% in August, still 4.7% below year-ago levels. The median existing-home sales price rose 1.6% year over year to $429,100 in August, marking a slower pace than July's 2% gain.
(Realtor.com) What this means for homebuyers
Looking ahead, borrowing conditions have become even more challenging since July closed, driven by 10-year Treasury yields surging to 10-year highs.
The 30-year fixed rate reached 7.03% as of Sept. 24, the highest level of the year, after the Federal Reserve raised its benchmark rate by 25 basis points on Sept. 16, its first hike since 2023.
"Even with a modest pickup in July, home price growth is not keeping up with inflation," says Smith. "If financing costs stay near 7% into the fall, the acceleration seen since spring may be difficult to sustain."
The Case-Shiller Index reports on a two-month delay and reflects a three-month moving average of home sales prices.
Homes usually go under contract a month or two before they close, so the July report primarily reflects purchase decisions made in the spring.
Although the Index's price data is delayed by several months, it is considered one of the best available measures of changing home values, because it is based on repeat transactions on the same properties.