US home price growth accelerated ahead of the coronavirus pandemic
U.S. home price growth continued to accelerate before the coronavirus forced states to order shelter-in-place.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 4.2% annual gain in February, up from 3.9% a month earlier. The results beat estimates of a 4.1% gain, according to Bloomberg.
The 20-City Composite posted a 3.5% annual gain, up from 3.1% in January — far outpacing estimates of 3.19%, according to Bloomberg. The 20-City Composite was led by Phoenix for the ninth straight month, posting a 7.5% year-over-year price increase. Every city in the 20-City composite reported an increase at a faster rate than in January.
“The stable growth pattern established in the last half of 2019 continued into February,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, in a press statement. “Today’s report covers real estate transactions closed during the month of February, and shows no signs of any adverse effect from the governmental suppression of economic activity in response to the COVID-19 pandemic. As much of the U.S. economy was shuttered in March, next month’s data may begin to reflect the impact of these policies on the housing market.”
This is a sale pending sign on a home in Mount Lebanon, Pa., Monday, April 27, 2020. (AP Photo/Gene J. Puskar)
In March, existing home sales fell by the most in almost five years as the coronavirus pandemic started to take a toll on the U.S. housing market. The National Association of Realtors said existing home sales tumbled 8.5% — the largest percentage decline since November 2015. New home sales also fell 15.4% in March, the most in more than six and a half years, according to the U.S. Commerce Department.
“As indicated by the existing home sales report, the spread of COVID-19 disrupted sales activity in late March,” said Nomura in a recent research note. “The pullback in demand should slow the acceleration of home price appreciation, but decreases in supply at the same time should offset some negative impact on prices.”
There’s been a shortage of new homes since 2014 and the lack of inventory is keeping prices up. Prior to the virus, historically low interest rates had set this year’s spring home buying season up to be a good one giving potential buyers more purchasing power. But there has not been enough supply to keep up with the demand.
In fact, a recent NAR survey found that sellers are not lowering their asking prices despite the virus. Instead they are willing to wait because there are still appears to be buyers out there.
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Amanda Fung is an editor at Yahoo Finance.
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