An illustration of a house next to a pile of money.
Illustration by Lanette Behiry/Real Estate News

Home price growth picked up this summer 

CoreLogic found home prices in July were 2.5% higher than a year ago, up from 1.6% appreciation in the spring.

September 12, 2023
3 minutes

Key points:

  • Even with elevated interest rates, CoreLogic is projecting prices to rise another 3.5% in the coming year.
  • The extreme inventory shortage is keeping prices from falling nationally even as demand decreases.
  • Idaho posted the biggest year-over-year price declines, while Vermont saw the biggest gains.

A new report found home price growth picked up steam this summer, continuing a long stretch of year-over-year increases.

CoreLogic estimates home prices in July rose 2.5% compared to a year ago, marking the 138th consecutive month of annual growth. The rise accelerated a rebound that started in the spring, with May and June experiencing 1.6% annual growth.

The continued price growth, plus mortgage interest rates in the 7% range, help explain why affordability is at its lowest levels in nearly 40 years.

But suppressed demand, brought on by elevated interest rates, may not help tame prices. CoreLogic is projecting home prices in July 2024 to be another 3.5% higher as the extreme inventory shortage keeps putting pressure on the market, said Selma Hepp, chief economist for CoreLogic.

"In other words, home prices are still growing but are in line with historic seasonal expectations," Hepp said.

Idaho prices way down, Northeast states are hot

While prices are rising on a national scale, 11 states saw year-over-year declines, with the western region experiencing some of the largest drops. Idaho prices fell the most, dipping 5.7% year-over-year, followed by Nevada (down 4.2%), Montana (down 3.6%) and Washington (down 3.3%).

The Northeast fared the best, with Vermont topping the list for annual appreciation in July (up 8.5%), followed by New Hampshire and New Jersey (both up 7.3%). Among metro areas studied, Miami had the highest annual gains with a 9% jump, followed by St. Louis (up 4.8%) and Detroit (up 4.5%).

Where will the market go next?

Given the current economic climate, the real estate market could go in a few different directions, said Lawrence Yun, chief economist for the National Association of Realtors. 

"One future scenario is some calming in the economy and inflation. That will lead to modestly lower mortgage rates and more buyers will come to the market," Yun said. "Hopefully, homebuilders will ramp up production and we'll continue to see the repurposing of empty commercial buildings into residential units. Home prices are not crashing in this scenario."

But another possibility is an economic recession leading to job losses — and lower mortgage rates.

"Those who lose jobs may be forced to sell their homes. Moreover, those uncertain about their jobs will not have the confidence to buy a home," Yun said. "However, a recession means much lower interest rates. And those with stable jobs — around 70% to 80% of workers — will want to take advantage of low interest rates."

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