In December, U.S. home prices rose at the fastest pace in almost seven years, fueled by low mortgage rates and Americans moving from crowded urban areas to suburban homes.
In December, the S&P CoreLogic Case-Shiller 20-city home price index, published on Tuesday, climbed 10.1% from a year earlier. Since April 2014, the year-end leap has been the largest and follows a solid 9.2 percent year-over-year rise in November.
In Phoenix, home prices rose 14.4 percent, in Seattle 13.6 percent and in Seattle 13 percent in December. Yet rates were rising all over. Chicago saw a 7.7 percent uptick, which registered the slowest price increase. Due to record-keeping delays caused by the coronavirus pandemic, Detroit was not included in the year-over-year estimates.
“These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, global head of index investment strategy at S&P DJI.XX. But he said it was unclear whether the trend would last.
Throughout the coronavirus pandemic, the housing sector has been resilient, aided by rock-bottom rates on home loans. The 30-year, fixed-rate mortgage average rate on the benchmark ticked up to 2.81% last week from 2.73%, but remains well below where it was a year earlier: 3.49%.
But last Thursday, the Commerce Department announced that in January, U.S. home construction dropped 6 percent, pulled down by a 12.2 percent decline in single-family home construction; apartment construction climbed 16.2 percent. Still, in January, applications for building permits, which usually show where home construction is going, grew sharply.