(NewsNation) — US home prices hit a record high in August as prospective homebuyers continue to grapple with historically low inventory and surging mortgage rates.
Prices rose 2.6% in August compared to the year prior, according to data from the S&P CoreLogic Case-Shiller US National Home Price Index released Tuesday.
The national index, which measures home prices nationwide, rose for a seventh consecutive month and is now at its highest level since it began in 1987.
“The year’s increase in mortgage rates has surely suppressed housing demand, but after years of very low rates, it seems to have suppressed supply even more,” Craig Lazzara, managing director at S&P
Dow Jones Indices said in a statement.
Home prices were up 5% in Chicago, which had the fastest annual price growth for the fourth consecutive month, followed by New York (4.98%) and Detroit (4.8%).
Skyrocketing mortgage rates have caused many homeowners to stay put, further constraining the supply of homes and driving up prices in many cities.
In September, sales of previously occupied U.S. homes fell for the fourth month in a row. The seasonally adjusted annual rate of 3.96 million homes marked the slowest sales pace since October 2010, according to the National Association of Realtors.
Other housing market indicators, like mortgage applications, are also at their lowest level in decades.
Now, home buyers have to make nearly $115,000 a year in order to afford a median-priced U.S. home, according to Redfin.
In more expensive parts of the country, like San Francisco, buyers need to make closer to $400,000 in annual income to afford the average home.