Home Prices Are Rising at the Fastest Pace Since the Great Recession, Price Barometers Show
Rocketing home prices present challenges for home buyers as many states began reopening businesses from coronavirus-related shutdowns. The post Home Prices Are Rising at the Fastest Pace Since the Great Recession, Price Barometers Show appeared first on Real Estate News & Insights | realtor.com®.
The numbers: Home prices rocketed at a fast pace yet again in November, according to two separate indices released Tuesday, making it increasingly more difficult for buyers to navigate the housing market as many states began reopening businesses from shutdowns related to the coronavirus pandemic. Recent data suggest price appreciation should gain steam in the latter half of the year.
The S&P CoreLogic Case-Shiller 20-city price index posted a 9.1% year-over-year gain in November, up from 8% the previous month. On a monthly basis, the index increased 1.5% between October and November.
Additionally, the broader S&P CoreLogic Case-Shiller national price index, which covers the entire country, demonstrated a 9.5% gain year-over-year in November, up from 8.4% the prior month.
What happened: Prices rose in at least 19 of the 20 large cities tracked by Case-Shiller. Detroit, which is typically included in the 20-city index, was again excluded because of issues collecting data during previous coronavirus-related shutdowns.
Phoenix experienced the largest price increase for the 18th consecutive month with a 13.8% increase, followed by Seattle (12.7%) and San Diego (12.3%).
Separately, the Federal Housing Finance Agency released its own monthly home price index for November. According to that report, home prices were up 1% from the previous month and 11% from November 2019. This is the sixth consecutive month in which home prices have risen, and annual gains are now outpacing the price growth seen during the last housing boom before the Great Recession, said Lynn Fisher, deputy direction of the division of research and statistics at the FHFA.
The big picture: While there may be evidence that demand among home buyers is waning from the heights reached this summer — as evidenced by lower mortgage application volumes — it still remains very strong. Plus, the supply of homes for sales is all but exhausted. The lack of inventory should continue to fuel home-price increases for foreseeable future, especially in popular markets such as Phoenix and Boise, Idaho.
But with mortgage rates potentially rising in the months to come, high home prices will threaten to push many prospective buyers out of the market.
What they’re saying: “The housing market is clearly still running strong, with housing starts, permits and existing home sales all notching decade-plus highs in recent months. Low mortgage rates and shifting preferences are stoking demand, and after a decade-long slump and consolidation following the housing bust, one can make the argument that the market is primed for a strong and prolonged expansion — this might have just been the catalyst to get it started,” Robert Kavcic, senior economist at BMO Capital Markets, wrote in a research note.
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