- House prices reported a record rise in the United States.
- The increase is 20 percent more compared to the previous year.
- There was also a consumer price increase in August.
The S&P CoreLogic Case-Shiller 20-City Home Price Index jumped 19.1% in June compared to the prior year, the largest increase on record, dating back to 2000.
Annual price gains in June were higher in the 20 cities analyzed than in May. Prices are now at record highs in 19 of the 20 cities, with the exception of Chicago.
“The past few months have been extraordinary not only in terms of price gains, but in the uniformity of earnings across the country,” said Craig Lazzara, managing director of investment strategy at S&P DJI indices.
There are signs that high prices are cooling sales a bit. Sales of used homes were up just 1.5% in July from a year earlier, according to a separate report released last week.
That is a much slower rate than the previous month. The number of contracts signed for the purchase of homes, an important indicator of final sales, has fallen for two consecutive months.
The effect of the pandemic
In June, prices rose the most in Phoenix (where they jumped 29.3% compared to the previous year), followed by San Diego (27.1%) and Seattle (25%). The COVID-19 pandemic caused many Americans to work from home, prompting them to look for homes in suburban areas that provide more space and are not as congested as apartments in large cities.
Yet many homeowners have been reluctant to sell during the pandemic, and new home construction has plunged amid a shortage of materials, land and labor.
Prices go up in August
Consumer prices in the United States rose 0.3% in August, less than expected, the smallest increase in seven months and a hopeful sign that inflationary pressures could be cooling.
The July increase was 0.5% and 0.9% in June, the Labor Department reported Tuesday. The August increase was the smallest since January, when there was also a 0.3% rise in inflation.
Consequences for the consumer
In the last 12 months, prices have risen 5.3%, a slight improvement after two months with 5.4% annual increases, which had been the highest in 12 months since 2008. Underlying prices, which exclude costs volatiles in food and energy, rose a miniscule 0.1% in August and 4% last year.
Republicans have criticized President Joe Biden’s administration for the price hike this year, but officials insist the increase is temporary and inflation will return to more normal levels as numerous supply chain problems are resolved. .