The S&P CoreLogic Case-Shiller report marked its highest annual home price reading in more than 30 years in May. Home prices were 16.6% higher in May 2021 than in May 2020, up from April’s 14.8% annual home price increase. The S&P Case-Shiller 10-city composite increased 16.4% compared to May 2020 levels while the 20-city composite increased 17%, reports CNBC. Every metro tracked in the 20-city composite recorded price increases while Phoenix, San Diego, and Seattle posted the highest annual gains of the 20 cities. Phoenix home prices were 25.9% higher, San Diego prices jumped 24.7%, and Seattle posted a 23.4% year-over-year increase.
Chicago, Cleveland and Minneapolis reported the lowest gains, although they were still in low double-digits.
“A month ago, I described April’s performance as ‘truly extraordinary,’ and this month I find myself running out of superlatives,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI. “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. May’s data continue to be consistent with this hypothesis.”
Five cities – Cleveland, Dallas, Denver, Seattle and Charlotte, North Carolina – saw their all-time highest annual gains. Price gains in all 20 cities were in the top quartile of historical performance; in 17 cities, price gains were in top decile.
Mortgage rates fell slightly to start May and held within a narrow range throughout the month. Rates have been so low for so long that even slight monthly moves higher have done nothing to take the heat out of home prices.
Sales of new and existing homes have weakened in the past few months, largely due to sky-high prices. The inventory of homes for sale has finally started to increase, albeit slowly. An increase in listings is the only thing at this point that could pull price gains back a bit.
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