US home price growth accelerated in April at the fastest pace in more than three decades as strong housing demand continued to cope with a housing shortage.
Data on Tuesday showed that the S&P Case-Shiller National Home Price Index, which covers all nine sections of the US Census, rose 14.6 percent year-on-year in April. It followed an annual jump of 13.3 percent in March, and was the “highest reading in more than 30 years,” according to the report.
Meanwhile, the 20-city complex, which covers US metropolitan areas including Dallas, Miami, New York and San Francisco, was up 1.6 percent from the previous month and 14.9 percent year on year.
That was the largest annual increase since December 2005 and compared to expectations for a 14.5 percent annual increase, according to economists surveyed by Refinitiv.
Phoenix, San Diego and Seattle posted the highest annual gains among 20 cities in April.
“April’s performance was truly exceptional,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
While the boom was driven in part by pandemic-related demand for suburban homes, he said it could also represent “an acceleration in purchases that would have occurred anyway over the next several years.”
US home prices soared last year as Americans took advantage of record low mortgage rates and bought suburban homes. This demand, along with a short supply of homes, has driven prices to record levels. This was exacerbated earlier this year by the sharp rise in lumber costs.
Economists say the rise in home prices is discouraging first-time buyers, although some expect demand for suburban real estate to subside as pandemic fears fade.
There are also some signs that the housing stock is starting to grow. The US Department of Commerce said last week Supplying new homes For sale rose 15,000 in May to 330,000, up 5.8 percent from a year ago. That represented a 5.1-month display of current sales pace, up from 3.6 months in January.
“The inventory buildup in recent weeks suggests that a respite from turbulent market conditions may be underway,” said Matthew Speakman, economist at Zillow. “But a return to a balanced market remains elusive, and there are few, if any, signs that home prices will start to subside anytime soon.”
Height housing prices It also caught the attention of Federal Reserve officials.
This week, Eric Rosengren, Chairman of the Federal Reserve Board of Boston, He told the Financial Times, The US cannot afford a “boom-and-bust cycle” in the housing market that would threaten financial stability. It has become common for cash-only buyers to win bidding competitions in Boston, he said.
Other Fed officials, including Dallas Fed President Robert Kaplan, have urged the central bank to reassess its support for the housing market with its $40 billion in monthly purchases of the agency’s mortgage-backed securities.