Swedish home prices continued to edge ahead last month in a rebound from one of the worst housing routs globally, defying borrowing cost increases and surging inflation.

Seasonally adjusted data released on Wednesday by state-owned lender SBAB showed that housing prices rose by 0.3% on month in July when transaction volumes are traditionally low.

The bank’s non-adjusted housing price index still shows that the value of homes has dropped by 13.5% since the spring of 2022. As market activity picks up again after a summer lull, the rout could continue. SBAB still expects a total price decline of 20% from the peak.

“You should be cautious about drawing too far-reaching conclusion from outcomes in single months, and especially during summer, when turnover is considerably lower than usual,” the bank’s chief economist, Robert Boije, said in a statement. “That being said, housing prices are still proving surprisingly resilient considering the rapid rise in interest rates.”

The Swedish Riksbank has taken its benchmark rate to 3.75% from zero since April last year and is widely expected to increase it to 4% at a meeting in September. The central bank published an improved forecast for the country’s property market in its latest monetary policy report, with the cumulative decline in prices seen limited to 15-20% from a peak in February last year.

(Adds Riksbank context in final paragraph, plus chart.)