Home Prices Exceed 2006 Peak, but are 16% Lower When Adjusted for Inflation

Home Prices Exceed 2006 Peak, but are 16% Lower When Adjusted for Inflation

U.S. Home price have surpassed their previous peak levels reached in July 2006, according to the benchmark S&P Case-Shiller CoreLogic National Index. However, the new peak is in nominal terms only. Adjusted for inflation, prices are still 16% lower than the 2006 high.

The new nominal peak is a culmination of 4-years of steady price gains since the market bottomed out in 2012.

While the new peak is a welcome milestone after the painful years following the real estate crash, experts are divided as to the future outlook of the real estate market, according to the Wall Street Journal. On the one hand, interest rates are still low, sales have been steadily increasing, more first-time buyers are jumping into the market and single-family housing starts are up.

However, there are warning signs. Mortgage rates are starting to creep up and loans are challenging to obtain, especially for less-affluent buyers. Meanwhile, home prices have grown at an inflation-adjusted rate of 5.9% since 2012, while incomes have increased by just 1.3% annually.