How Will Boosted Demand Affect Home Prices?
The most recent results of the S&P Case-Shiller Home Price Indices – considered to be the leading measure of U.S. home prices – show home values are up 3.2 percent over where they were last year at the same time. That's encouraging news for prospective home buyers and a significant drop from where price growth was just a few years ago. But the news comes with a word of caution. That's because price growth is slowing at the same time mortgage rates have been declining. And the improvement in affordability levels may already be boosting demand for homes. That could have an effect on price trends in the weeks ahead. Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices, says recent data shows an uptick in buyer demand. “Home price gains remained positive in low single digits in most cities, and other fundamentals indicate renewed housing demand,” Murphy said. “According to the National Association of Realtors, the YOY change in existing home sales was positive in July for the first time in a number of months, and housing supply tightened since peaking in June.” So what does that mean? It means if buyer demand increases, competition for available homes could lead to slowing prices to speed up once again. More here.