Home prices in 20 U.S. cities climbed more than forecast in July, reflecting solid demand against a backdrop of modest listings of properties, figures from S&P CoreLogic Case-Shiller showed Tuesday.
The 20-city property values index rose 5.8% year-to-year (the estimate was 5.7%). The national price gauge increased 5.9% year-to-year. The seasonally adjusted 20-city index advanced 0.3% month-to-month (the estimate was 0.2%).
Buyers are competing for a limited number of for-sale homes, allowing sellers to boost asking prices. Property values are consistently outpacing wage growth, helping explain why the share of first-time buyers of previously owned homes in August was at a one-year low. At the same time, owners' equity as a share of total real estate holdings climbed in the second quarter to the highest level in 11 years.
Home prices may also get a boost in coming months after hurricanes Harvey and Irma reduced housing supply in parts of Texas and Florida. Affordability may remain challenging, as both sales and construction are interrupted by clean-up efforts. At the same time, a strong labor market and low-borrowing costs continue to encourage hopeful home buyers.
While home prices continued to advance strongly along the Northwest part of the country, values were also picking up in Denver, Dallas and Las Vegas — underscoring a broadening of appreciation throughout the U.S. Las Vegas, one of the hardest-hit cities during the housing collapse, registered the third-largest year-over-year advance in July.
"While the gains in home prices in recent months have been in the Pacific Northwest, the leadership continues to shift among regions and cities across the country," David Blitzer, chairman of the S&P index committee, said in a statement. "Rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures."
Seattle (up 13.5%), Portland, Ore. (up 7.6%), and Las Vegas (up 7.4%) were the top three cities in terms of year-over-year price appreciation. Home prices in Detroit and Dallas were up 7.3%, while Denver posted a 7.2% advance. After seasonal adjustment, Los Angeles and San Francisco had the biggest month-over-month increases at 0.8%, while Chicago had a 0.2%.
