US home prices hit 6-year high as more people flee cities, says Case-Shiller
Numbers: The cost of buying a home rose again in October, according to a closely tracked index, and prices rose at the fastest pace in six years, a clear sign that the housing market is still booming despite a raging pandemic.
A measure of home prices in 20 major cities rose at an annual rate of 7.9% in October, according to the S&P CoreLogic Case-Shiller Price Index. This is up from 6.6% the previous month.
A larger Case-Shiller measure that covers the entire country, meanwhile, showed an equally large 8.4% increase in home prices over the past year. It is also up sharply from 7% the previous month.
Prices have increased at the fastest rate since 2014 due to record mortgage rates and an influx of people leaving cities to escape the coronavirus and find more space. The shortage of homes for sale was also a contributing factor.
On a monthly basis, the Case-Shiller 20 Cities Index rose 1.3% in October.
What happened: Prices rose in at least 19 of the 20 major cities tracked by Case-Shiller. Detroit was once again ruled out because it was not possible to gather enough information. A state lockdown in an attempt to slow the spread of the virus has resulted in delays in record keeping.
The largest annual increases in home prices were in Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).
The smallest increases occurred in New York (6%) and Chicago (6.3%) and Las Vegas (6.4%) – cities that have been hit hard by the virus or whose local economies have been hit hard by the virus. suffered more.
Big picture: Home sales are unlikely to slow much, if at all, even in the midst of a record-breaking coronavirus outbreak. Very low interest rates and the growing outlook for the economy to gradually return to normal should keep demand high.
That’s good news for sellers, but bad news for potential homebuyers, who likely won’t get much of a price drop in 2021.
what do they say? “Data from the past few months is consistent with the view that COVID has encouraged potential buyers to switch from city apartments to suburban homes,” said Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices.
Market reaction: The Dow Jones Industrial Average and S&P 500 rose in trading on Tuesday. Inventories hit an all-time high on optimism that coronavirus vaccines will soon lead to a stronger economic rebound.