Strong demand from homebuyers in July, coupled with
rock-bottom mortgage interest rates, caused home prices to accelerate in major
markets across the nation.
Nationally, home values rose 4.8% annually, up from a 4.3%
gain in June, according to the S&P CoreLogic Case-Shiller U.S. National
Home Price Index.
The 10-City Composite annual increase showed a 3.3% gain, up
from 2.8% in the previous month. The 20-City Composite rose 3.9% annually, up
from 3.5% in June. Detroit was not included in the series, due to data
collection issues, so it covered just 19 cities.
Phoenix, Seattle and Charlotte reported the highest annual
gains among the 19 cities. Phoenix prices rose 9.2%, followed by Seattle with a
7% increase and Charlotte with a 6% increase. Sixteen of the 19 cities reported
higher price increases in the year ending July 2020 versus the year ending June
2020.
“In previous months, we’ve noted that a trend of
accelerating increases in the National Composite Index began in August 2019.
That trend was interrupted in May and June, as price gains decelerated
modestly, but now may have resumed,” said Craig Lazzara, managing director and
global head of Index Investment Strategy at S&P Dow Jones Indices.
“Obviously more data will be required before we can say with confidence that
any COVID-related deceleration is behind us.”
This index is actually a three-month running average, so it
incorporates prices from May, June and July. More recent data from others
points to prices strengthening even more in August.
“Weekly home price data show that sellers are raising asking
prices at a double-digit pace, and surprisingly, eager buyers are willing to
give them what they’re looking for,” said Danielle Hale, chief economist for
realtor.com. “Looking forward, we saw asking prices rise by double digits in
August so we expect to see another big jump in next month’s release.”
Mortgage rates hit several new record lows in mid-summer and
haven’t moved much higher since. These low rates give buyers more purchasing
power, and therefore fuel bigger gains in home prices.
“The U.S. housing market has been caught up in a ‘perfect
storm’ during the COVID-19 pandemic,” said Selma Hepp, deputy chief economist
at CoreLogic. “The substantial swing in demand is driven by a need for indoor
and outdoor space met by record low mortgage rates and a wave of millennials
who were on the verge of buying – all competing for fewer and fewer homes on
the market.”
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