Washington (AFP) – US home prices rose again in October as the housing market continued to boom in the wake of last year’s coronavirus recession.
On Tuesday, the S&P CoreLogic Case-Shiller Index of home prices in 20 cities rose 18.4% from a year earlier. The gain represented a slight slowdown from a 19.1% year-over-year increase in September, but was roughly in line with what economists had been expecting.
All 20 cities reported double-digit annual gains. The hottest markets were Phoenix (up 32.3%), Tampa (28.1%) and Miami (25.7%). Minneapolis and Chicago reported the smallest increases, 11.5% each.
The housing market has been strong thanks to very low 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 living at home during the pandemic, are looking to move from apartments to larger homes or homes.
“House price growth will slow further next year, but it will continue to rise,” said Danielle Hill, chief economist at Realtor.com. As housing costs eat up a larger share of home buyers’ salaries, buyers will get creative. Many will benefit from continued workplace flexibility to relocate to suburbs where despite house price gains, many can still find a lower per square foot price than neighboring cities. ″
It remains unclear whether this shift is permanent or an aberration, said Craig Lazzara, managing director of S&P Dow Jones Indices.
“We have previously suggested that the strength in the US housing market is driven in part by a change in local preferences as households react to the COVID pandemic. More data will be needed to understand whether this increase in demand represented the acceleration of purchases that would have occurred,” Lazarra said. over the next several years, or reflect a more permanent secular change.
Last week, mortgage rates fell — to 3.05% for a standard 30-year, fixed-rate and 2.66% for a 15-year fixed-rate home loan. Consistently low rates indicate that credit markets seem more concerned about the omicron variable limiting economic growth than about the highest rates of inflation in nearly 40 years.
The National Association of Realtors reported last week that sales of previously occupied homes rose for the third consecutive month in November to a seasonally adjusted annual rate of 6.46 million.