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September 25, 2023

National data shows CT had second-highest increase in July home sale prices

Contributed | pixabay.com/photos/house-home-sold-brick-for-sale-435618/ A house for sale.
By Andrew Larson

New data from First American Financial Corp. shows that home prices in Connecticut increased 27% from July 2022 to July 2023, the second-highest rate in the country.

First American, a California-based real estate company, released its latest Real House Price Index data Monday.

The real estate price index measures price changes of single-family homes, adjusted for the impact of income and interest rates. It also serves as a measure of housing affordability.

Nationally, real house prices increased 16.9% between July 2022 and July 2023, according to the report. Homes were less affordable in July than in more than 30 years, the report says.

Median household income increased only 3.7% since July 2022.

The drop in affordability is due to a 4% annual increase in nominal home prices, along with a 1.4% percentage point increase in the average 30-year fixed mortgage rate, compared to a year ago.

“For home buyers, holding prices constant, the only way to mitigate the loss of affordability caused by higher mortgage rates is with an equivalent, if not greater, increase in household income,” said Mark Fleming, chief economist at First American.

The 3.7% increase in household income since July 2022 wasn’t enough to offset the loss from higher rates and rising nominal prices.

The median sale price of a U.S. home in July was about $345,000. The median house-buying power was nearly $337,000. 

“If housing is appropriately valued, house-buying power should equal or outpace the median sale price of a home,” Fleming said. 

The only state that had a greater year-over-year increase in real home prices was Maine, which clocked in at 27.8%.

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