After seven months of continuous gains, home prices have reached a new record high.
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Home prices have jumped 5.8% year-to-date, according to the CoreLogic S&P Case-Shiller Index. In August, home prices increased 2.6% year-over-year.
Conversely, home sales are at the lowest level in 15 years, according to the report accompanying the index update.
Many potential homebuyers have been priced out due to the jump in prices, spike in mortgage rates and borrowing costs, and low supply. Current homeowners are wary of listing their properties and are waiting until the market stabilizes, taking advantage of their lower mortgage rates, according to Bloomberg. Home sales are 22% below last year's levels year-to-date, CoreLogic said.
Nearly a third of homes on the market are newly built. At 30.6%, the share of new-build homes is the greatest for any third quarter on record, Redfin reported. That number was 25% two years ago and 28.9% last year. The jump in new builds reflects the decrease of existing homes going up for sale.
Sales of these newly built single-family homes climbed 12.3% year-over-year. The increase is due to builders being able to offer perks and other concessions like mortgage rate buydowns that other home sellers aren't able to match.
Before the pandemic, mortgage rates were 3%, but they have jumped to 8%, the biggest leap in over two decades.
“Persistent mortgage rate increases have put the U.S. housing market in a quagmire,” CoreLogic wrote in its report.
Home prices have accelerated the fastest among West Coast metros like San Diego, Los Angeles, San Francisco, Seattle and Phoenix, CoreLogic reported. Places where prices have reached an all-time high include Miami, New York, Boston and Atlanta.
CoreLogic said price growth is likely to continue through the rest of 2023.
“Although housing prices have increased significantly this year, climbing 5% from the early-year low, higher mortgage rates and seasonal trends will slow further monthly gains — with some possible declines in winter months,” CoreLogic Chief Economist Selma Hepp said in a statement. “Nevertheless, the year-to-date gains indicate that growth will pick up through the end of 2023 compared to last year’s slump during this time period.”
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