Let me walk you through what Realtor.com Research just reported on home prices, because it shows some interesting momentum building in the national market right now. Through June, the Case-Shiller Index shows home price growth picking up steam across the board. The national index climbed 1.5% year over year, which is better than May's 1.2%, and when you look at the broader composites tracking larger metro areas, the gains look even stronger. This acceleration has now been building for four straight months, which is a real shift from the slowdown we saw earlier in spring.
Here's the catch though. Even as prices are moving up nominally, they're not keeping pace with inflation. According to Realtor.com Research, home values have actually declined in real purchasing power for thirteen months running, since inflation is outpacing those price gains by a couple percentage points. The backdrop on mortgage rates has made things tougher too. Rates held near 6.5% during the period when these June sales were closing, and they've since climbed to 6.65% by mid-August as bond markets shifted. That's starting to show up in pending sales, which fell in both June and July.
What's really striking about this cycle is how differently various regions are performing. Chicago continues to lead with nearly 7% annual gains, while the Northeast and Midwest markets like New York and Cleveland are seeing solid appreciation. But out West, it's a completely different story. Seattle is down 2%, Las Vegas down 1.9%, and Denver down 1.2%. That near nine-point gap between the best and worst performing metros tells you this isn't a national story so much as a very localized one. The supply-constrained Northeast and Midwest are outperforming while Western and Sun Belt markets are still dealing with new construction competition.
What I am seeing locally in the Bay Area and East Bay mirrors these national tensions. We've got some strong fundamentals in our supply-constrained core markets, but the higher rates are definitely making buyers think twice, and pending sales activity reflects that hesitation. If mortgage rates stay elevated heading into fall, that momentum from June may not hold, especially in markets still working through construction inventory.
