Two new reports released Tuesday show home prices continuing their skyward vault, with supply shortages and strong demand putting upwards pressure on prices.
U.S. single-family home prices in 20 key urban markets rose 19.1 percent in June from a year earlier, marking the largest annual price increase in the 20-year history of the 20-city composite measure, according to the S&P CoreLogic Case-Shiller home price index (pdf), released on Aug. 31.
“June 2021 is the third consecutive month in which the growth rate of housing prices set a record,” Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI, said in a statement. “The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country.”
The 20-city index shows home prices are now 29.9 percent higher than the 2006 peak.
At the same time, the Case-Schiller national composite index, which covers all nine U.S. census divisions, saw an 18.6 percent annual gain, also a record for the series, which dates back to 1987.
“June’s 18.6 percent price gain for the National Composite is the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data. This month, Boston joined Charlotte, Cleveland, Dallas, Denver, and Seattle in recording their all-time highest 12-month gains,” Lazzara said.
The national index shows home prices nationwide are now 41.3 percent higher than their last peak during the 2006 housing boom.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes. June’s data are consistent with this hypothesis,” Lazzara said.
Meanwhile, an Aug. 31 report from the Federal Housing Finance Agency (FHFA), showed house prices rose 17.4 percent from the second quarter of 2020 to the second quarter of this year. At the same time, house prices vaulted 4.9 percent in the second quarter of 2021 compared to the earlier quarter, with over-the-year price growth in June coming in at 18.8 percent and 1.6 percent over the month.
“During the second quarter, house prices peaked in June with an 18.8 percent growth rate compared to a year ago,” Lynn Fisher, Deputy Director of FHFA’s Division of Research and Statistics, said in a statement. “For the quarter, annual gains surpassed 20 percent in the Mountain, New England, and Pacific census divisions and in all of the top 20 metro areas.”
House prices have risen for 40 consecutive quarters, according to FHFA figures.
Sales of new single-family homes increased in July after three straight monthly declines, according to a Commerce Department report released last week (pdf), pushing the median price of a new home in July to a record high of $390,500.
At the same time, the median price of an existing home retreated slightly to $359,900 in July from $363,300 in June, according to a recent report from the National Association of Realtors (NAR). While the dip may be an encouraging sign for buyers facing sticker shock, the July price was up 17.8 percent from a year ago and marked the 113th straight month of year-over-year increases.
“Although we shouldn’t expect to see home prices drop in the coming months, there is a chance that they will level off as inventory continues to gradually improve,” Lawrence Yun, NAR’s chief economist, said in a statement.