US home price growth picked up in March despite COVID-19

Home price growth in the US accelerated in March, leading into the widespread lockdowns imposed by states to deter the spread of the novel coronavirus. 

Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 4.4% annual gain in March, up from 4.2% a month earlier. The 20-City Composite posted a 3.9% annual gain, up from 30.5% in February — beating analysts’ estimates of 3.4%, according to Bloomberg. However,  the 20-City Composite really represents 19 cities because there were delays in transaction records for the Detroit metro area (Wayne County, Mich.) due to the novel coronavirus. 

“Housing prices continue to be remarkably stable,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, in a press statement, adding that the gains continue “a trend of gently accelerating home prices that began last autumn. March results were broad-based. Prices rose in each of the 19 cities for which we have reported data, and price increases accelerated in 17 cities.”

Since the results represent home sales for the month of March it does not represent the impact of the lockdowns across the U.S. due to the coronavirus.  “The subsequent April report will likely show a more pronounced slowdown of home price appreciation, as these policies remained in effect in most states,” wrote Nomura in a recent research note. 

The price growth follows lackluster residential construction and home sales activity for April as the novel coronavirus took its toll on the U.S. economy. The Commerce Department said Tuesday that ground breakings plummeted 30.2% last month to a seasonally adjusted annual rate of 891,000 — the lowest level since February 2015.

Existing home sales fell in April to its lowest level since July 2010, down 17.8% to a seasonally adjusted annual rate of 4.33 million from a month earlier  and down 17.2% from the same month a year ago, according to the National Association of Realtors.  Meanwhile, the median existing-home price in April was $286,800, up 7.4% from April 2019, as prices increased in every region. New home sales for April will be released later Tuesday morning and is expected to be down 20.43% from a month earlier.

“Despite the plunge in home sales, home prices have been more stable than expected amid the COVID-19 crisis,”  BofA Glocal Research said in a recent research note. “This is likely due to a considerable amount of home sellers withdrawing from the housing market, exacerbating the preexisting issue of limited inventory.” 

“The economic lockdowns – occurring from mid-March through April in most states – have temporarily disrupted home sales,” said Lawrence Yun, NAR’s chief economist, in a press statement. “But the listings that are on the market are still attracting buyers and boosting home prices.”

But analysts expect home price growth to slow down in April. “We would expect to see house prices deteriorate in the coming months as output declines and unemployment rises,” said Barclays in a recent note. 

Amanda Fung is an editor at Yahoo Finance.

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