Latest real estate indexes confirmed that US housing prices growth remained strong in July. Although the trend is expected to normalize downward in the coming months (amid negative base effects), demand will remain supported by low borrowing costs. The 30-year mortgage rate hit a 4-week low and has remained below 3% since the beginning of July.

Housing Prices Rose Most In Decades

Latest data for July confirm that housing prices growth kept strenghtening. The CoreLogic House Price grew by 18% YoY, the largest 12-month growth in the U.S. index since the series began (January 1976 – January 1977). The report highlighted “appreciation of detached properties (19.7%) was again the highest measured since the inception of the index and nearly double that of attached properties (11.6%) as prospective buyers continue to seek more living space and lower density communities.“

In the meantime, the Freddie Mac House Price index increased by 20.1% YoY in July (the largest increase since data are recorded back to 1975). In this context, I expect the S&P CoreLogic Case-Shiller 20-City Composite index to jump by more than 20% YoY in July (release schudeled for September 28th).

slight modifcation to Jonathan's #rstatshttps://t.co/UfRMf2u08O

— 📈 Len Kiefer 📊 (@lenkiefer) September 13, 2021

30-Year Mortgage Rate Hit A 4-Week Low

Even though peak growth is probably behind us, the downward normalization will take time with demand still being supported by low borrowing costs. According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 2.86% for the week ending September 16, 2021. It was down from the previous week when it averaged 2.88%. A year ago at this time, the 30-year FRM averaged 2.87 percent.

Over the same period, Freddie Mac report also showed the 15-year fixed-rate mortgage averaged 2.12% (6-week low), down from 2.19% prior. A year ago at this time, the 15-year FRM averaged 2.35 percent.