Case Shiller Home Prices: Continued Gains Before Rate Spike

Bottom Line:  Prices rose in June as the housing market continued to rebound in the months leading up to the latest surge in mortgage rates. Prices were higher in nearly every primary metro market. The strongest markets were some of those that had been the weakest, including San Deigo, San Francisco, New York, and Las Vegas. Trends were generally higher, with three-month annualized gains of 8.9% nationally, well above the pace of the prior six months, up 5% annualized, and the year-on-year readings of roughly flat. All that said, these data were tallied before the surge in mortgage rates in early July and the continued grind higher throughout much of this month. In June, the average effective 30-year fixed-rate mortgage averaged just under 7%, 50+ basis points below current levels. Overall, the sharp correction in home prices had ended as the market found new clearing levels amid continued solid underlying demand for housing. The latest move in mortgage rates will test the robustness of that demand amid still lower affordability.