Home-price growth held at a record high in August, as demand from home buyers remained robust despite skyrocketing prices.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 19.8% in the year that ended in August, unchanged from the prior month.
Demand to buy homes has surged since the start of the Covid-19 pandemic, as households looked for more space to work from home and some workers were willing to move farther from their offices. But the number of homes on the market has held well below historic levels, forcing buyers to compete in bidding wars and pushing up home prices.
The Case-Shiller index, which measures repeat-sales data, reports on a two-month delay. In more recent weeks, the pace of home-priced gains has slowed. The median existing-home sales price in September rose 13.3% from a year earlier to $352,800, the National Association of Realtors said earlier this month.
Mortgage rates have increased in recent weeks, which could slow home-price gains further by raising monthly payments for home buyers. The average rate on a 30-year fixed-rate mortgage rose to 3.09% as of Thursday, according to mortgage-finance giant Freddie Mac.
Rising home prices are pushing some buyers out of the market. While the number of home sales rose in September, the proportion of first-time buyers dropped to 28%, the lowest level since July 2015, according to NAR. But there are still plenty of well-heeled buyers and investors who haven’t been deterred by the high prices.
“Strong home price appreciation rates are narrowing the pool of buyers, particularly first-time buyers,” said Selma Hepp, deputy chief economist at CoreLogic. However, “the depth of the supply and demand imbalance and robust demand among higher-income earners will continue to push prices higher.”
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The Case-Shiller 10-city index gained 18.6% over the year ended in August, compared with a 19.2% increase in July. The 20-city index rose 19.7%, after an annual gain of 20% in July. Price growth accelerated in eight of the 20 cities.
Economists surveyed by The Wall Street Journal expected the 20-city index to gain 19.8%.
Phoenix had the fastest home-price growth in the country for the 27th straight month, at 33.3%, continuing its record streak in the top spot. San Diego posted the second-fastest growth, at 26.2%.
A separate measure of home-price growth by the Federal Housing Finance Agency also released Tuesday found a 18.5% increase in home prices in August from a year earlier.
Write to Nicole Friedman at [email protected]
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