By Safiyah Riddle
(Reuters) - U.S. home prices rose on a monthly basis in June while annual prices were unchanged, adding to a growing body of evidence that housing costs have already begun to recover.
The S&P CoreLogic Case-Shiller national home price index, which covers all nine U.S. census divisions, increased month over month by 0.7% in June on a seasonally adjusted basis after rising by 0.8% in May. Another index tracking the 20 largest metro areas rose 0.9% on a monthly basis, topping estimates in a Reuters poll of economists for a 0.8% gain.
On a year-over-year basis, the national price index was unchanged in June versus a 0.4% fall in May. The 20-city index was down by 1.2% in June after sliding 1.7% annually in May, a possible sign that an anticipated bottoming in prices could be materializing.
Craig Lazzara, managing director at S&P DJI, underscored the trend, noting that the National Composite has risen 4.7% year to date, faster than the historical median full-year increase.
"We recognize that the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, but the breadth and strength of this month’s report are consistent with an optimistic view of future results,” he said.
The housing market has been highly sensitive to the Federal Reserve's aggressive interest rate hiking campaign, with sales cooling precipitously after the Fed started hiking rates in March 2022. But demand has remained relatively resilient against the highest mortgage rates since 2001, and an acute shortage of existing homes on the market has propped up prices in recent months.
That could be unwelcome news to the U.S. central bank. In a speech at the annual Jackson Hole Economic Policy Symposium on Friday, Fed Chair Jerome Powell cited a "possibly rebounding" housing sector among a number of robust economic indicators that might force the Fed to continue hiking rates.
The strongest gains were recorded in Chicago and Cleveland, and the greatest price declines in San Francisco and Seattle.