Home prices in April saw an annual gain of 14.6% in April — up from a 13.3% increase in March, per the latest S&P CoreLogic Case-Shiller National Home Price Index.
Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Index, called April’s gain “truly extraordinary,” as home price gains have been expanding for the last 11 months.
“The 14.6% home price gain in the National Composite is literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data,” Lazzara said. “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. April’s data continue to be consistent with this hypothesis.”
The monthly 10-city composite was up 14.4% year over year, and up from 12.9% in March. The 20-city composite was 14.9% higher, up from 13.4% in March. The cities with the highest year-over-year home price gains were Phoenix (22.3% increase), San Diego (21.6% increase), and Seattle (20.2% increase), with a more than 20% gain each. And Charlotte, Cleveland, Dallas, Denver and Seattle saw their largest annual gains ever.
Phoenix, San Diego, and Seattle have been growing steadily since the beginning of 2021. The three metros have seen at least a 15% increase in sales every month since January.
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Each region of the country reported double-digit sales volume increases in the latest Case-Shiller report, led by a 17.2% increase in the West and a 16.9% increase in the Southwest.
“This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years,” Lazzara said. “Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing.”
The inventory of homes for sale rose slightly in May compared with April, but was still 21% lower than May 2020.
“Mortgage rates remain near historic lows, a demographic wave of households aging into prime homeownership years continues to swell, and despite showing some signs of bottoming, the number of available homes for sale remains historically small, particularly given the elevated demand for housing,” said Matthew Speakman, Zillow economist.
The Federal Housing Finance Agency also released its U.S. House Price Index, noting that prices rose 1.8% nationwide in April. Home prices rose 15.7% from April 2020 to April 2021.
For the nine census divisions, seasonally adjusted monthly home price changes from March 2021 to April 2021 ranged from up 1.2% in the West-North-Central division to up 2.6% in the Mountain and Middle-Atlantic divisions.
“This unprecedented home price growth persists due to strong demand, bolstered by still-low mortgage rates, and too few homes for sale,” said Lynn Fisher, FHFA deputy director of research and statistics.