New data shows home values are continuing to rise across America as owners and buyers anxiously await a cut in interest rates by the Federal Reserve.
The stubborn resistance of the Fed continues to hold back the property market, but the pressure of pent-up demand from buyers continues to move the needle of home values.
The National Association of Realtors (NAR) has reported 75% metro markets (170 out of 228) registering home price gains between March and June.
NAR said the median average value for a family home rose 1.7% year-over-year to $429,400 – that’s a record high. A 3.4% increase was registered in Q1.
Values may rise higher and faster in the coming months.
Americans are now anticipating a September cut in the federal funds rate to help stimulate the economy and boost the real estate market.
The Fed has held its benchmark interest rate steady at a 4.25% to 4.5% range since a 0.25% cut last December.
Political pressure continues to be piled on the Fed in various forms.
However, it’s worth remembering that 12 months ago the rate was 5.5% – a peak designed to dampen the prolonged, post-Covid spike in inflation.
The Fed’s Open Market Committee hinted at the possibility of a cut this month, saying: “Recent indicators suggest growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid.”
A critic of the Fed, NAR’s Chief Economist Lawrence Yun, said: “Home sales and the homeownership rate are underperforming relative to job growth.
“There have been over 7 million net job additions compared to the pre-Covid peak. However, elevated mortgage rates have kept home sales below pre-Covid levels. The homeownership rate has fallen by a full percentage point since early 2023.
“If interest rates decline, the strongest release of pent-up housing demand is likely to occur in states with significant job growth, such as Idaho, Utah, the Carolinas, Florida and Texas.”
In its latest data, NAR identified annual value growth in three of its four designated regions that cover the US.
Northeast: $527,200 (+6.1%)
Midwest: $328,800 (+3.5%)
West: $646,100 (+0.6%)
South: $376,300 (No change)
It said 5% of metro areas recorded double-digit price gains in the second quarter.