Record low inventory and strong buyer demand once again pushed up the cost of homes in the U.S., as prices in November rose 9.5% nationally over the same time last year, according to the S&P CoreLogic Case-Shiller index. November’s numbers mark the greatest annual growth rate since February 2014 and even blew past the 8.4% gains seen in October.
The 10-city composite price increase checked in at 8.8% year-over-year, and it was also up from 7.6% in October. The 20-city composite showed a 9.1% year-over-year gain, and was also up from 8.0% in October. Detroit was once again excluded from the indices due to insufficient data reporting as a result of the pandemic.
According to the CoreLogic Buyer/Seller Market Indicator, which measures the ratio between sold price and list price, buyer competition reached a new peak nationally in October and November when the ratio climbed to 0.996 – the highest level since 2008, when the data series began.
Though demand typically cools in the early winter months, CoreLogic deputy chief economist, Selma Happ, said housing once again exceeded expectations.
“With buyer demand continuing to outpace the previous year’s levels amid historically lowest inventory of for-sale homes, the pressure on home prices is going to fuel home price growth in the first half of 2021,” Happ said.
Over the past few decades, the inventory of affordable homes has been in sharp decline while home prices have risen dramatically. There’s one possible solution.
Presented by: Fannie Mae
Matthew Speakman, economist at Zillow, expects home prices to reach an all-out sprint.
“Even as the pandemic accelerated its rapid spread across the country, this fervent market competition has shown few, if any, signs of cooling and is unlikely in the near future. Combined, annual growth in home prices should continue its sharp upward trajectory in the months to come,” Speakman said.
Novembers numbers were buoyed by record-low mortgage rates, Speakman noted, which plumbed new depths in November. With ultra-low rates in place, a wave of eager would-be homebuyers flooded the market, further stoking the already-intense competition for homes.
Of the cities that posted the greatest gains, Phoenix, Seattle and San Diego showed the strongest price appreciations. Phoenix led the pack with a 13.8% year-over-year price increase, followed by Seattle with a 12.7% uptick and San Diego with a 12.3% jump.
Notably, even the cities registering the slowest price growth, Las Vegas and Dallas, showed above-normal price gains, at roughly 7%.
Overall, all 19 cities reported higher price increases in November year-over-year versus October.
“By most measures, housing market strength continued and in some cases intensified at the end of 2020 Looking ahead, early data on 2021 indicate that home prices continue to push double-digit growth over one year prior, suggesting that additional gains are ahead for the Case Shiller Index, too,” said realtor.com Chief Economist, Danielle Hale.
According to Hale, realtor.com’s 2021 outlook expects an eventual moderation to price gains as home construction ramps up and the widespread availability of COVID vaccines bring more flexible sellers back to the housing market. But it will be some time before these changes bring relief.