August’s housing prices up by 5.2%
WASHINGTON — U.S. home prices rose the most in two years in August as low mortgage rates spurred competition for an increasingly scarce supply of listings.
The S&P CoreLogic Case-Shiller 20-city home price index, released Tuesday, showed that home prices climbed 5.2% in August from a year earlier, accelerating from a 4.1% gain in July. The gain was stronger than economists had expected.
Phoenix (up 9.9% from August 2019), Seattle (up 8.5%) and San Diego (7.6%) posted the biggest gains. All 19 cities in the index recorded price increases. The 20-city index excluded prices from the Detroit metropolitan area index because of delays related to pandemic at the recording office in Wayne County, which includes Detroit.
Helped by rock-bottom mortgage rates, the U.S. housing market has been a source of strength as the U.S. economy climbs back from an April-June free fall caused by the pandemic and the measures taken to contain it.
“The supply of for-sale
homes, already extremely tight, has only become more constrained in recent months, and historically low mortgage rates continue to encourage many buyers to enter the market,” Matthew Speakman, economist at the real estate firm Zillow, said in a research note. “This heightened competition for the few homes on the market has placed consistent, firm pressure on home prices for months now, and there are few signs that this will relent any time soon.”
Also, Americans who haven’t lost jobs in the pandemic are rushing to buy real estate, moving to suburbs where there is more space to quarantine. Second homes also are selling quickly as companies allow
employees to continue working remotely. Bidding wars are becoming more common in some areas.
“While the path of the overall economy is likely to be most directly dictated by coronavirus-related and political developments in the coming months, recent trends suggest that the housing market — which has basically withstood every pandemic-related challenge to this point — will continue its strong momentum in the months to come,” Speakman said.
The number of properties sold for which construction hadn’t yet started increased to 319,000 in September, the highest in 14 years and a sign construction will remain robust in coming months.
The National Association of Realtors reported last week that sales of existing homes shot up 9.4% in
September and that the median selling price of a home climbed 15% from a year earlier to $311,800.
And the Commerce Department reported that homebuilding rose 1.9% in September on a surge in construction of single-family homes.
In the same week, the Commerce Department said sales of new homes dropped 3.5% from August to a 959,000 annualized pace from a downwardly revised 994,000 rate, the Commerce Department said Monday.
Despite the modest decrease, sales of new homes are up 32.1% from a year earlier, the report said.