New York Leads The Way: Home Prices Surge 9% As National Market Hits New High

Home prices have soared to new highs again.

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The latest S&P CoreLogic Case-Shiller U.S. National Home Price Index, issued Tuesday, reported a 5.4% annual gain in June, setting a record even as the pace of growth showed signs of easing.

New York City, often seen as a bellwether for urban real estate trends, led the charge with a 9% year-over-year increase, nearly double the national average.

"The S&P CoreLogic Case-Shiller Indices continue to show above-trend real price performance when accounting for inflation," said Brian Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. He noted that while housing and inflation have moderated, the gap between the two remains unusually wide, deviating from historical norms.

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The 20-city composite index, reflecting broader urban trends, posted a 6.5% annual increase in June, a slight dip from May's 6.9%. Following New York's lead, San Diego and Las Vegas saw increases of 8.7% and 8.5%, respectively.

Meanwhile, Portland, Oregon, trailed the pack with a 0.8% increase.

The ongoing rise in home prices comes amid growing concerns over affordability, which has increasingly dominated public discourse. "The upward pressure on home prices is making this the most unaffordable housing market in history," warned Lisa Sturtevant, chief economist at Bright MLS.

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Despite mortgage rates hovering around 7% in June, the persistence of high prices has surprised many industry observers. Danielle Hale, chief economist at Realtor.com, forecasts a further slowdown in price growth, predicting an overall increase of just 4.6% for 2024.

Luke highlighted a trend of lower-priced homes appreciating more across many cities. "Looking at the last five years, 75% of the markets covered show low-price tiers rising faster than the overall market." The trend is more pronounced in New York, where homes in the lower tier have appreciated nearly 20% more than the broader market in that period.

As the housing market evolves, the disconnect between rising home prices and broader inflation remains a concern. Luke pointed out that home prices have recently outpaced inflation by an average of 2.8% – a full point above the 50-year norm. 

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While home price growth is slowing, the upward trend despite economic headwinds suggests a set of drivers at work.

For many Americans, the dream of homeownership remains elusive as the market sets new records amid an evolving economic backdrop. The looming question is whether the trend points to a new normal or a sharper correction is on the horizon.

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