People move into a house for sale in Floral Park, Nassau County, New York on 6, 2020.
Wang Ying | Xinhua News Agency | Getty Images
Kovid-induced demand from homebuyers in the summer led to an exceptionally strong rise in home prices.
According to the S&P CoreLogic Case-Schiller US National Home Price NSA Index, the value rose 7% year-over-year in September, from 5.8% annualized in August. This is the largest annual profit since September 2014. Prices are now around 23% higher than their last peak in 2006.
The 10-city composite grew by 6.2% from 4.9% in the previous year. The 20-city composite posted a 6.6% gain, up from 5.3% in the previous month. There was no reading for Detroit due to epidemic-generated data collection issues.
The index is a three-month moving average, so it represents prices from July to September, when buyers were demanding homes with more space to work and school at home due to coronovirus.
“Housing prices were remarkable – I’m tempted to say ‘very’ strong in September,” Craig J. Lazara, managing director and global head of index investment strategy at S&P Dow Jones Indis, said. “This month’s growth could capture COVID-depressed demand from earlier this year; it could also determine future strength, as COVID encourages potential buyers to move from urban apartments to suburban homes. The next several Months of reports can help. Highlight this question. “
Phoenix, Seattle, and San Diego continued to see the highest annual gains in September among the 19 cities (excluding Detroit). Home prices in Phoenix rose 11.4% year-over-year, followed by 10.1% in Seattle and 9.5% in San Diego.
Dallas, Chicago and New York saw the smallest annual gains, but still above the 4% range compared to September 2019.
All 19 cities reported higher price increases in the year ending in September 2020 than in the year ending in August 2020.
The low mortgage rate, which has set 13 new record lows this year, has helped fuel demand and prices. Rates are now below the full percentage point of a year ago.
George Springiou, senior economist at Realtor.com, said, “The Spring Springbubbing season boosted sales well into October and into past times when they would start slowing normally,”. “Leading in winter, demand remains strong, driven by mortgage rates that have broken a record 13 times this year and a growing list of companies that have extended their remote working policies well into 2021.”
Adding to the pressure on house prices is the ever shrinking supply of homes for sale, already at record lows. According to the National Association of Realtors, the inventory fell to 2.5 months of supply at the end of October.
While single-family home construction is slowly growing, it is not even close to meeting demand, especially in lower price levels. In addition, single-family construction permits, which are an indicator of future construction, were originally flat from October to month according to the US Census, suggesting construction is not going to increase significantly in the winter months.