S&P/Case-Shiller: Home price growth slows in June with 5.1% year-over-year gain

Dive Brief:

U.S. home prices on the S&P Core Logic Case-Shiller 20-city Home Price Index rose 5.1% year over year in June, slightly lower than May's increase of 5.3%. Home prices for all nine census divisions increased 5.1% year over year, the same as May, according to HousingWire.
In the 20-city index, Portland, OR, home prices increased the most (12.6%), followed by Seattle (11%) and Denver (9.2%). A total of nine cities on the 20-city index reported monthly price increases, but after seasonal adjustment, both the 20-city and 10-city indices slipped 0.1% month over month.
The index's year-over-year San Francisco price increase (6.4%) reflects a cooling in growth that could result in somewhat of a normalization of the city's housing market by the end of the year, according to Business Insider.

Dive Insight:

Wages still have not caught up to rising home prices, however, which means that affordability in many markets, including San Francisco, is still an issue. However, the slight slowdown in June home prices is welcome news for potential homebuyers struggling to afford properties on the market.

Affordability tops the list of U.S. homebuyer concerns, according to a Redfin report this month. The site found that more than 28% of overall respondents indicated that home prices are their biggest worry when looking for homes. Millennials clocked in at 32%, however, indicating that the finances around homeownership are a particular concern among the younger group. Homebuyer worries are not unfounded. According to The Wall Street Journal, between 200,000 and 300,000 households are priced out of the housing market every year, due largely to bad credit, student loan debt and stricter lending standards. This lack of affordability and access to mortgages threatens to create a permanent class of renters.

Also this week, Zillow reported that year-over-year home prices in the U.S. were up 5.1% in July, the 48th consecutive monthly increase. Rents are also on the upswing, at 2.2% higher than they were last year. Despite rising prices, new single-family home sales were up 12.4% between June and July 31.3%, reaching the strongest rate since 2007. However, along with an increase in existing home prices (5.3% year over year to $244,100), sales of existing homes fell 3.2% from June to July. Zillow said this decline indicated that tight existing home inventory is putting pressure on prices.