Home prices are being driven up month-to-month, but these increasing home prices may be a short-lived trend. In May, national home prices grew annually by 4.1%, but June saw a 4.9% annual increase, according to CNBC. In only one month’s time, home prices increased 1%, making it the fastest monthly gain for June in seven years. When looking at each market, there are some with even higher increases, such as Philadelphia. But economists predict prices to drop next June by 1%, and for price increases to calm down over the next 12 months.
Prices got a boost from record low mortgage rates, which give buyers more purchasing power. The average rate on the popular 30-year fixed mortgage jumped up to 3.24% at the start of the month, but then fell precipitously, ending June at 2.94%, according to Mortgage News Daily.
“Mortgage rates hit record lows this spring, which enhanced affordability for homebuyers,” said Frank Nothaft, chief economist at CoreLogic. “First-time buyers, and millennials in particular, have jumped at the opportunity to achieve homeownership.”