Today’s S&P Case-Shiller Index reflects the competitive nature of the summer 2021 housing market, with interested buyers ranging from families looking for a home in anticipation of a back-to-school in-person buyers looking for larger homes in desirable suburban markets. With inventories remaining tight, prices rose at a record 19.7% in July, a three-decade high. Additionally, the average mortgage rate for a 30-year loan rose from 2.98% at the start of July to 2.80% at the end of the month, bolstering the ability of eager buyers to push prices higher. The indices for the 10 and 20 cities increased by 19.1% and 19.9% respectively. Real estate markets across the country saw strong price gains, with 17 of the index’s 20 cities posting higher annual advances, with Phoenix homes seeing a notable price increase of 32.4%, followed by San Diego and Seattle, with gains of more than 25% compared to the same month in 2020.
The index included prices from May, June and July, as companies explored plans to bring employees back to the office environment, and people across the country embraced holiday travel after a year of social distancing. . Furthermore, the employment figures indicate a continuation of the recovery. The month also offered the first glimpses of the delta variant of COVID, which led to a possible spike in cases in August and September, forcing companies to pause plans to return to the workplace.
However, for housing, July also saw a growing wave of homes hitting the market as many owners decided to move forward with plans delayed by the pandemic, boosting sales. The flow of new inventory on Realtor.com, which continued into August, gave buyers more options and helped to mitigate some of the price spikes and breakneck pace of early 2021. While the prices continue to rise, the growth rate has been moderate. This should ease as we move into the fall season and the competition in the hot market softens into more typical seasonal patterns. For many buyers, fall already offers better buying opportunities, with fewer competing offers, the return of the unexpected and more announcements with price reductions.