The Fall in Home Prices May Already Be Over

Home prices aren’t falling anymore.

After declining on a year-over-year basis for five consecutive months—the longest run of declines in 11 years—U.S. home prices rose in July. 

The surprisingly quick recovery suggests that the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected after mortgage rates soared last year.

Scarcity is a big reason. High interest rates have prompted homeowners to stay put rather than buy new homes and take on more expensive mortgages, resulting in an unusually low inventory of homes for...