Home prices in 20 U.S. cities accelerate the most since 2018

The S&P CoreLogic Case-Shiller index of property values increased 3.9% from 2019, beating the estimate of 3.6%. It was the biggest year-over-year increase since December 2018.

The housing market has been an unexpected bright spot for the U.S. economy, with Americans eager to take advantage of record-low mortgage rates. A shortage of inventory has helped prop up prices, particularly as Americans look for more space to spread out.

"With buyer demand showing no signs of a slow down, as well as limited inventory, more price increases are inevitably on the horizon," said Danielle Hale, chief economist at Realtor.com.

The biggest increases came in Phoenix (9.2%), Seattle (7%) and Charlotte (6%). New York (1.3%), Chicago (0.8%) and San Francisco (2.5%) saw the smallest gains in July among the 20 cities tracked by the index.

Still, prices were up in those cities, even as the pandemic created anxiety about dense urban living. The pandemic has fueled a narrative that Americans are fleeing cities for the suburbs.

And while some residents have departed high-cost locations, including New York and San Francisco, the death of urban living is a "myth," according to a research note from Barclays.

Read more: Mortgage Rates in the U.S. Increase, With 30-Year Loans at 2.9%

The higher homes prices come as the available inventory of properties to buy is tight. Some sellers are reluctant to list during a pandemic, while home builders are being cautious as they grapple with high lumber costs.

And while the homebuying stalled when the pandemic first hit, real estate is showing strength even with high unemployment and mounting bankruptcies putting the economic recovery on shaky ground.

"The housing market has withstood basically every obstacle that the pandemic has thrown its way," Matthew Speakman, an economist at Zillow, said in a statement. "It appears that upward price pressure should endure into the fall."