Lean inventory fueling home-price gains in 20 U.S. cities
Steady price gains in 20 U.S. cities in May indicate that a tight supply of properties paired with increased demand is boosting home values, according to figures from S&P CoreLogic Case-Shiller on Tuesday.
The 20-city property values index increased 5.7% year-to-year (the estimate was 5.8%). The national price gauge advanced 5.6% year-to-year. The seasonally adjusted 20-city index rose 0.1% month-to-month (the estimate was 0.3%).
A shortage of listings is still behind the rapid appreciation of home prices, particularly in high-demand areas such as Seattle and Portland, Ore., where values have surpassed pre-recession peaks.
Housing demand is supported by a solid labor market, steadily rising wages and low mortgage rates. While lofty asking prices are making it difficult for some Americans to become homeowners for the first time, they’re encouraging owners of more expensive properties to put their houses up for sale, as trade-up demand remains solid.
“Home prices continue to climb and outpace both inflation and wages,” David Blitzer, chairman of the S&P index committee, said in a statement. “The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices. New home construction, higher than during the recession but still low, is another factor in rising prices.”
All cities in the index showed year-over-year gains, led by a 13.3% advance in Seattle, an 8.9% increase in Portland and a 7.9% gain in Denver. After seasonal adjustment, Seattle had the biggest month-over-month increase, at 0.9%, while New York posted a 0.6% decline.
Home prices fell in six cities in May from the prior month. A separate report from the FHFA showed its home-price index climbed 0.4% in May after a revised 0.6% gain a month earlier.