Price gains accelerate despite 6.5%+ rates

Home prices are surging this month to their highest annual growth rate in 15 months, despite mortgage rates reaching an 11-month high, according to the latest data from Intercontinental Exchange.

The annual growth rate jumped from 1.3% in June to 1.7% in July, marking the fifth consecutive month of acceleration and the largest single-month increase in more than three years, ICE's mortgage technology unit reported in its home price index. Month over month, prices are expected to rise 0.26% on a seasonally adjusted basis.

"Part of it's a byproduct of some of the cool home prices, and even home-price declines, rolling out of the backward 12-month window from last year," Andy Walden, head of mortgage and housing market research at ICE, told National Mortgage News. "Seasonally-adjusted gains continue to hold steady despite rates ticking up above 6.5% over the last couple of months. That's a little more noteworthy and a little less expected."

Seasonally adjusted growth has exceeded 0.2% in each of the last six months. Prices fell 0.14% month over month last July, ICE found.

If current gains hold through the end of the year, annual home-price growth will accelerate to roughly 3% by December, but rising inventory and elevated rates could put pressure on the monthly progress, ICE said.

"Annual growth should continue to trend higher just from a momentum standpoint over the next couple of months, but how high that goes later this year is really going to be dictated by what we see from these seasonally-adjusted gains as we make our way into the fall," Walden said.

As the 30-year mortgage rate dipped below 6% for the first time since 2022 early this year, active listings hit their lowest level in nearly a year, creating a firmness the market is still riding today. Rates and inventory have both risen since, perhaps indicating prices will soften in the fall, Walden said.

While single-family home prices are up 2% year-over-year, condo prices are down 0.7%. Half of major markets are also seeing condo prices below last year's levels, and 97 of the top 100 markets show condos underperforming single-family homes, the report showed.

Typically, condos are a leading indicator as to whether the housing market is firm or soft. Homeowners association fees and property insurance costs play a role in falling prices as well, especially in states with severe weather risks, like Florida, Walden said.

Home prices are rising almost everywhere

Three-quarters of markets are seeing prices rise year-over-year, the largest share in more than a year, and seasonally-adjusted annual growth pacing ahead of their trailing 12-month figures, suggesting further acceleration in the coming months, particularly in New York and Ohio, the report said. 

Upstate New York is leading the country in price growth, as Rochester, Syracuse and Albany are posting the largest year-over-year gains among major U.S. markets at 8.7%, 7.4% and 6.8%, respectively. Rochester also has the strongest growth rate of any major market in more than a year, according to ICE.

Cape Coral, Florida, is seeing the steepest decline at 3%, followed by San Antonio at 2.1% and Austin, Texas, at 1.8%. Seasonally-adjusted gains are also running below annual growth across much of Florida, signaling softness isn't easing.