The Star Democrat

US home prices surge 18.4% in October

- BY PAUL WISEMAN

WASHINGTON (AP) — U.S. home prices surged again in October as the housing market continues to boom in the wake of last year’s coronaviru­s recession.

The S&P CoreLogic CaseShille­r 20-city home price index, out Tuesday, climbed 18.4% in October from a year earlier. The gain marked a slight decelerati­on from a 19.1% year-over-year increase in September but was about in line with what economists had been expecting.

All 20 cities posted doubledigi­t annual gains. The hottest markets were Phoenix (up 32.3%), Tampa (28.1%) and Miami (25.7%). Minneapoli­s and Chicago posted the smallest increases, 11.5% each.

The housing market has been strong thanks to rockbottom mortgage rates, a limited supply of homes on the market, and pent-up demand from consumers locked in last year by the pandemic. Many Americans, tired of being cooped up at home during the pandemic, are looking to trade up from apartments to homes or to bigger houses.

“Home price growth will slow further in the year ahead, but continue to go up,” said Danielle Hale, chief economist at Realtor.com. “As housing costs eat up a larger share of home purchaser’s paychecks, buyers will get creative. Many will take advantage of ongoing workplace flexibilit­y to move to the suburbs where despite home price gains, many can still find a lower price per square foot than nearby cities.”

It remains unclear if that shift is permanent or an aberration, said Craig Lazzara, managing director at S&P Dow Jones Indices.

“We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preference­s as households react to the COVID pandemic,’’ Lazzara said. “More data will be required to understand whether this demand surge represents an accelerati­on of purchases that would have occurred over the next several years, or reflects a more permanent secular change.’’

Last week, mortgage rates fell — to 3.05% for the benchmark 30-year, fixed-rate and 2.66% for the 15-year fixed-rate home loan. The persistent­ly low rates signal that credit markets appear more concerned about the omicron variant depressing economic growth than about the highest inflation rates in nearly 40 years.

The National Associatio­n of Realtors reported last week that sales of previously occupied homes rose for the third straight month in November to a seasonally adjusted annual rate of 6.46 million.

 ?? NAM Y. HUH ?? A homes sale sign is shown in front of a new home constructi­on site in Northbrook, Ill., Wednesday, June 23, 2021. U.S. home prices rose briskly in September, another sign that the housing market is booming in the aftermath of last year’s coronaviru­s recession. (AP Photo/Nam Y. Huh)
NAM Y. HUH A homes sale sign is shown in front of a new home constructi­on site in Northbrook, Ill., Wednesday, June 23, 2021. U.S. home prices rose briskly in September, another sign that the housing market is booming in the aftermath of last year’s coronaviru­s recession. (AP Photo/Nam Y. Huh)

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