U.S. experiences boom in house prices, S&P reports

WASHINGTON, D.C. — U.S. home prices rose at the fastest 12-month pace for more than three years in 2017 as buyers fought over a limited number of available properties.

Standard & Poor’s said this week that its S&P CoreLogic Case-Shiller national home price index jumped 6.3 per cent last year, the most since June 2014. Home prices are rising much faster than wages and overall measure of inflation.

Steady hiring and broad economic growth are making it easier for more Americans to afford a house, spurring demand. Yet fewer Americans are listing their homes for sale, in some cases because they would face a higher mortgage rate if they bought a new home. The number of homes for sale in January was the lowest for that month on record dating back to 1999.

David Blitzer, managing director at S&P Dow Jones indices, compared the run-up in home prices with the stock market gains of the past year. “The rise in home prices should be causing the same nervous wonder aimed at the stock market after its recent bout of volatility,” Blitzer said. “We are experiencing a boom in home prices.”

Home prices in the S&P CoreLogic Case-Shiller 20 city index have soared 62 per cent from their low point in the housing bust, Blitzer said. That’s much faster than the 12.4 per cent increase in inflation.

Still, sales of existing homes have stalled in the past two months and might remain slow after mortgage-rates rises.