Big picture: The housing sector is showing strength across the board resulting from a combination of low mortgage rates, rising demand, and shift in consumer preferences as a result of the pandemic.
The numbers: The S&P CoreLogic Case-Shiller 20-city price index posted a 5.2% year-over-year gain in August, up from revised 4.1% in the previous month, according to a report released by S&P Dow Jones Indices recently. The gain was in line with expectations of Wall Street economists surveyed. On a monthly basis, the index increased 0.5 in August.
The S&P CoreLogic Case-Shiller 20-City Composite Home Price NSA Index seeks to measures the value of residential real estate in 20 major U.S. metropolitan areas: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa and Washington, D.C.
The strength was consistent nationally. All of the 19 large cities tracked by Case-Shiller posted increases in housing prices in August.
What happened: The separate national index released with the report noted a 5.7% increase in home prices across the U.S. over the past year. This is the fastest pace in more than two years.
House prices rose nationwide in August, up 1.5 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 8.0 percent from August 2019 to August 2020. That’s the fastest annual gain since March 2006.
For the nine census divisions, seasonally adjusted monthly house price changes from July 2020 to August 2020 ranged from +0.9 percent in the East South Central division to +1.9 percent in the West South Central division. The 12-month changes ranged from +7.2 percent in the West North Central division to +9.7 percent in the Mountain division.
Phoenix once again led all other markets nationwide with a 9.9% annual price gain in August, followed by Seattle with an 8.5% increase and San Diego with a 7.6% increase. Phoenix has been the strongest housing market for 15 months.
What Experts are saying:
“If future reports continue in this vein, we may soon be able to conclude that the COVID-related deceleration is far behind us,” said Craig Lazzara, global head of index investment strategy at S&P Dow Jones Indices.
“We expect some moderation in home price growth in the fourth quarter as the pace of home sales cools in the face of a resurging pandemic and a faltering recovery,” said Nancy Vanden Houten, economist at Oxford Economics.