Radian: U.S. Home Prices Continue to Rise Amid Housing Imbalances
Radian, Philadelphia, said after a strong finish to the first half of 2020, home prices across the United States continued to rise sharply, albeit at a slower pace in July from June.
The Radian Home Price Index released today by subsidiary Red Bell Real Estate LLC reported home prices nationally rose from June to July at an annualized rate of 6.8 percent. Year over year, the HPI rose by 8.1 percent, unchanged from June’s pace. Through the first seven months of 2020, the average monthly annualized increase was 7.8 percent with each of the last four months reporting above average appreciation.
“Home prices across the U.S. continued an impressive appreciation run in July,” said Steve Gaenzler, Radian Senior Vice President of Data and Analytics. “When contrasting the effect on home prices of negative COVID headwinds on the U.S. consumer and economy versus the trifecta of historic low mortgage rates, near record low supply of homes for sale and increased demand for homeownership, so far home prices have come out on top.”
Gaenzler noted while not contained in current data, “recent changes to housing policy from the White House, Congress and the government-sponsored enterprises related to future stimulus and forbearance provisions, along with continued unknowns related to COVID-19 may begin to weigh on housing in coming months.”
Nationally, Radian reported the median estimated price for single-family and condominium homes rose to $258,206. The 6.8 percent quarterly increase represented a slight increase over the second quarter.
Gaenzler said ongoing imbalances between housing supply and demand continue to provide solid support for home prices. He noted on the demand side, July recorded the highest level of monthly home sale transactions over the past decade. Conversely, supply of homes in July, as measured by the count of listings of homes for sale, was 15 percent below the average monthly count over the past five years, and nearly 27 percent below the peak monthly listing count over the same period. Strong demand for the limited supply also pushed the average number of days that a property for sale has been listed to 114 days, the shortest stay in more than a decade.
The report said regionally, July gains were solid as well, with all reporting positive price appreciation in residential markets in July. Year-over-year increases in home prices ranged across the regional landscape from 9.9 percent (Midwest) to 4.3 percent (Northeast). All other regions recorded annual price appreciation rates between +6.5 and +7.8 percent.
In July, all but five U.S. states reported the highest average sales price of 2020. However, states that did not record the highest average sales prices of 2020 (Connecticut, Maine, Pennsylvania, Rhode Island, South Dakota and Hawaii) all recorded average sales prices in July well above the 2020 year-to-date average. “Momentum of home price appreciation differs by state; however, all states are still recording positive home price appreciation,” the report said.
At the metro level, Radian said the summer buying season benefited a majority of areas, with 90% of the largest metros seeing strongest appreciation of 2020. Eighteen of the 20 largest metros had a stronger annualized monthly increase in July than those recorded in prior months of 2020.
“The traditional strength on the spring has been pushed into summer as result of COVID-19,” the report said. “As such, positive market appreciation and absorption of supply continues across metro areas.
The report said July saw homes listed for sale going under contract at rates up to 60 percent higher in 2020 than 2019. In the Los Angeles market, for example, counts of homes transitioning from Listed to Under Contract was 57 percent higher in July than a year ago, and the number of closed sale transactions in July nearly 40 percent higher than the same month of 2019. Similar market conditions in Under Contract status updates exist in other major markets, such as Houston (52%), Miami (43%), Dallas (37%), San Francisco (25%) and Atlanta (25%).