Home prices have seen their biggest increase since 2006, raising questions about affordability.
The S&P/Case-Shiller Home Price Index report has indicated that US home prices increased 2.5% for the 20-city composite index in May compared to April, and saw their largest year-on-year increase since March 2006. Denver and Dallas reached record levels, passing pre-financial crisis peaks in June 2007 and August 2006.
Year-over-year, the 10- and 20- city composite indices rose 11.85% and 12.2%, respectively.
Five other cities – Atlanta, Chicago, San Diego, San Francisco and Seattle – posted monthly gains of greater than 3%, a first-ever occurrence, the report said.
Some analyzing rising prices in the housing market believe it could have troubling implications for affordability. Online real estate network and research provider Zillow’s Chief Economist Dr. Stan Humphries recently pointed to rapidly rising house prices as a potential pitfall for buyers.
“Pockets of very rapid appreciation will remain, a troubling sign of volatility and a potential future headache as affordability is compromised and homes begin to look much more expensive to average buyers,” Humphries said.