Used-car prices have reached their highest level in eight months, as robust consumer demand unexpectedly drove prices higher in the final two weeks of June.
On a seasonally adjusted basis, wholesale prices rose 0.53% month-over-month in June, according to Manheim, an auto auction company. Manheim’s Used Vehicle Value Index now sits at 134.9, up 4.3% from a year ago. It’s also the highest level since October.
Jonathan Smoke, chief economist for Manheim’s parent company, Cox Automotive, said prices typically soften in the spring and summer months, but the market closed the second quarter in a stronger position than expected.
“The recent increase in sales helped the market regain ground in terms of keeping price performance ahead of 2017 numbers,” Smoke said in a news release. “Used-vehicle prices remain higher now compared to where they were at the beginning of any of the last three years.”
Analysts have expected used-car prices to drop as more off-lease vehicles hit the market. But in the first quarter, the average transaction price of a used vehicle climbed 2.2% year-over-year to $19,657, according to analysis by Edmunds.
Manheim found that used-car sales grew 2% in June compared to the same month a year earlier. With demand keeping a brisk pace, dealers are aggressively searching for inventory, Manheim said. The company added that higher interest rates and the potential impact of tariffs on new cars may also put upward pressure on prices.
Compact and midsize cars showed price gains of more than 5% in the second quarter, while SUVs and crossovers posted a 4.5% increase. Prices for used luxury cars fell 1%, making it the only segment to post a quarterly decline.