Listings lean, home prices jump 7.9%

WASHINGTON — A measure of home prices in 20 U.S. cities rose in October by the most in six years as ultralow mortgage rates and increased buyer appetite for more space depleted housing inventory.

That combination of strong demand and limited supply pushed home prices up 7.9% compared with October 2019, according to Tuesday’s S&P CoreLogic Case-Shiller 20-city home price index. That’s the largest annual increase since June 2014. Home prices rose 1.6% from the month before, the most since April 2013.

The coronavirus outbreak has forced millions of Americans to work from home and it’s curtailed other activities like eating out, going to movies or visiting gyms. That’s leading more people to seek out homes with more room for a home office, a bigger kitchen, or space to work out.

“The data from the last several months are consistent with the view that covid has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, Managing Director at S&P Dow Jones Indices.

At the same time, the lack of inventory and surge in home prices threaten to slow housing’s momentum and price some buyers out of the market.

All 19 cities reported larger year-over-year price gains in October than in September, Lazzara said. Detroit wasn’t able to fully report its home sales data because of delays related to a coronavirus lockdown.

The biggest price gain was in Phoenix for the 17thstraight month, where home prices rose 12.7% from a year ago. It was followed by Seattle with 11.7% and San Diego at 11.6%.

The figures show how a lean number of listings and solid demand have given sell

ers more leeway to raise asking prices.

Home sales slipped in November, according to the National Association of Realtors, after rising steadily for the previous five months. Even after the decline, sales were nearly 26% higher last month compared with a year ago. Sales also have been fueled by low mortgage rates, which reflect the Federal Reserve’s moves to keep its benchmark short-term rate at nearly zero.

The number of homes for sale fell 9.9% to 1.28 million in November from the month before, the Realtors group said, enough to last just 2.3 months at the current pace of sales. Both figures are record lows.

U.S. long-term mortgage rates dropped last week to a record low for the 16th time in 2020, mortgage giant Freddie Mac said Thursday.

The average rate on the benchmark 30-year fixed-rate home loan slipped to 2.66% from 2.67% last week. A year ago, it stood at 3.74%.

The average rate on 15-year fixed- rate loans, popular among homeowners seeking to refinance mortgages, dipped to 2.19% from 2.21%. A year ago, it was 3.19%. The five-year adjustable rate mortgage was unchanged this week at 2.79%. A year ago, it was at 3.45%.