Home prices have been stagnant for a number of years, with the past 18 months being no exception. It has been two decades since the market moved at a pace that was as strong as stock market gains.
However, there are now signs that prices could be rising. While prices are not showing positive signs in major metropolitan markets, the overall National Home Price Index rose over 3% in July surprising most real estate analysts. Secondary markets have shown the highest gains with Las Vegas up almost 5% and Charlotte at 4.6%. The southwest and southeast are showing strong signs of continual growth. Housing supply also tightened in July.
Lower long-term interest rates, and projections that rates may go even lower certainly fueled a great deal of momentum, but even so it came as a bit of a shock to many followers of real estate prices that July ticked up. While the gains are not red hot, steady single digit gains were reached across most cities signaling renewed demand for a longer period of time.
Seattle was the only city to show an annual price decline, down 0.6%. The largest cities including New York and San Francisco had very slow growth and demand but nonetheless showed growth. New York and San Francisco’s real estate market stayed stable, however, compared to the national market even through the roughest years so it is not a surprise that it did not keep pace with the national market.
A lot of factors will play into the real estate market heading into 2020 with it being an election year, and the stock market already close to all time highs. However, the low interest rates and momentum are encouraging signs for a strong real estate market. While lower interest rates can cut a bank’s profit margins, a robust real estate market would certainly lead to more growth in the lending sector.
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