U.S. Home Prices Rise at Fastest Pace in Two Years
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For the week of: November 2, 2020
MARKET RECAP
U.S. Home Prices Rise at Fastest Pace in Two Years
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 on Tuesday. The gain was in line with expectations of Wall Street economists surveyed by Econoday. On a monthly basis, the index increased 0.5 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.
The strength was consistent nationally. All of the 19 large cities tracked by Case-Shiller posted increases in housing prices in August.
A separate measure, the Federal Housing Finance Agency house price index, rose 1.5% in August and is up 8% year-on-year. That’s the fastest annual gain since March 2006.
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.
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.
What S&P Dow Indices says: “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.
What are other economists saying: “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.
Market reaction: U.S. stock benchmarks opened lower Tuesday with the Dow Jones Industrial Average down 121 points.
Source: Realtor.com ? | Jacob Passy
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Zillow: Pandemic uncertainty is keeping 34% of home sellers out of the market
Hesitant home sellers could be one reason there is such low housing inventory, according to a report from Zillow. Thirty-four percent of would-be home sellers said they are staying out of the market due to the uncertainty caused by COVID-19.
That uncertainty includes financial anxiety, which is keeping 31% of homeowners from selling in the next three years, according to the report.
A recent change in employment was a barrier to finding a new home for 27% of those who responded, while 17% said another reason was that their spouse or partner was laid off or involuntarily unemployed. On the other hand, one out of 10 homeowners said they weren’t selling because an adult child or other family member had moved in with them during the pandemic.
Nearly 40% of homeowners who said they would consider selling in the next three years said that they anticipate a more favorable price if they wait.
“Potential sellers are likely correct that home prices have yet to reach their peak, but in the long run, prices tend to rise, so there’s no clear ‘right time’ to sell,” Zillow Senior Economist Jeff Tucker said. “Homeowners who feel life is uncertain right now may think they can still get a strong price if they delay selling until they have more clarity.
“The catch is that waiting to sell may raise the cost of a trade-up. This fall’s record-low mortgage rates, which make a trade-up more affordable on a monthly basis, are not guaranteed to last,” Tucker said.
The difficulty of finding a new home is definitely weighing on some consumers, as 31% of homeowners in the survey who were considering selling in the next three years said their plans paused because they are concerned about finding or affording a new home.
Of those who are hesitant to put their home on the market, virus safety was one of the least frequently cited concerns among homeowners. Only 25% of potential sellers said they weren’t selling because they were concerned about their household’s health and safety during COVID-19.
Taking advantage of mortgage forbearance was the reason 6% of homeowners who were considering selling in the next three years decided to stay put.
And those who have just refinanced are also unlikely to sell soon. Record-low mortgage rates are the reason 15% said a recent refinance was a reason not to list their home for sale.
Source: HousingWire | Julia Falcon
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