Home prices in 20 U.S. metro areas rise most in two years
U.S. home prices rose the most in two years in August as low mortgage rates spurred competition for an increasingly scarce supply of listings.
The S&P CoreLogic Case-Shiller index of values in 20 of the largest metropolitan areas climbed 5.2% from a year earlier, beating every estimate in a Bloomberg survey of economists. It was the biggest annual gain since August 2018.
Americans who haven't lost jobs in the pandemic are rushing to buy real estate, moving to suburbs where there is more space to quarantine. Second homes are also selling quickly as companies allow employees to continue working remotely. Bidding wars are becoming more common in some areas.
"Home prices are being pulled higher because demand has taken off and supply is still incredibly short," said Mark Vitner, senior economist at Wells Fargo Securities. "People are staying more at home so they're less inclined to sell right now."
Phoenix led price gains with a 9.9% jump, followed by Seattle with an 8.5% increase and San Diego with a 7.6% uptick, according to the report.
Matthew Speakman, an economist at Zillow, called it a "remarkable surge" that defies typical seasonal patterns.
"While the path of the overall economy is likely to be most directly dictated by coronavirus-related and political developments in the coming months, recent trends suggest that the housing market — which has basically withstood every pandemic-related challenge to this point — will continue its strong momentum in the months to come," Speakman said in a statement.
A separate report from the Federal Housing Finance Agency showed prices jumped 8% in August from a year earlier. The 1.5% gain from July was the largest monthly increase in data going back to 1991. The FHFA index is based on conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.