In June, home prices reached a new record high on the S&P Case-Shiller Index.

• Prices nationally were 5.4% higher than June 2023.
• Among the top 20 cities, New York experienced the highest annual price increase of 9% in June, while San Diego and Las Vegas followed closely behind with annual increases of 8.7% and 8.5%, respectively.
• In June, Portland, Oregon experienced the smallest annual growth of 0.8% among the top cities.

Despite the increase in mortgage interest rates, the S&P CoreLogic U.S. National Home Price Index reached its highest level ever.

Despite a record high for the index, the annual gain in prices nationally was smaller than May's 5.9% reading, according to data released Tuesday.

The 10-city composite's annual growth rate decreased from 7.8% to 7.4%, while the 20-city composite's year-over-year increase decreased from 6.9% to 6.5%.

"According to Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, the gap between housing and inflation has widened beyond historical norms, with the National Index averaging 2.8% higher than the Consumer Price Index. This is a full percentage point above the 50-year average. Before adjusting for inflation, home prices have increased by over 1,100% since 1974, but have only doubled (111%) after factoring in inflation."

Among the 20 cities, New York experienced the greatest annual increase in prices, with a 9% climb in June. San Diego and Las Vegas followed closely behind with annual gains of 8.7% and 8.5%, respectively. In contrast, Portland, Oregon, had the smallest annual rise in June at just 0.8%.

The latest report on housing affordability has divided each city's market into three price tiers and found that 75% of large markets over the past five years have seen low-price tiers rising faster than the overall market.

In the release, Luke stated that the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes.

"The largest five-year outperformance in New York is in its low tier, which rose nearly 20% above the overall region. Additionally, New York has the largest divergence between low- and high-tier prices. In contrast, San Diego experienced the largest appreciation in higher-tier homes over the past five years."

While the overall San Diego market has seen a 72% increase in prices over the past five years, the high tier has experienced a 79% rise, compared to the lower tier's 63% increase.

Despite a sharp rise in mortgage rates from April to June, the average index showed an increase in prices. Typically, an increase in rates leads to a decrease in prices.

According to Mortgage News Daily, the average rate on the 30-year fixed mortgage started at 6.5% in April and then rose to 7.5% by the end of the month. However, rates remained above 7% until July when they fell back below that level. Currently, the 30-year fixed rate is around 6.5%.

"Since June, mortgage rates have decreased, but despite this, there is evidence that the decline in rates has not been sufficient to entice buyers back into the market, according to Lisa Sturtevant, chief economist at Bright MLS. Some buyers are holding off on purchasing homes until both home prices and interest rates drop."

Despite seasonal factors and increased inventory, home prices are unlikely to decrease significantly in the fall, and are predicted to remain higher than the previous year.