Home price growth hit levels not seen in 15 years.
The S&P CoreLogic Case-Shiller U.S. National Home Price Index jumped 11.2 percent year over year in January. That’s up from the 10.4 percent gain in December, which was the best December in seven years.
The index’s highest annual rate of price growth on record was in February 2006.
The housing market has seen rapid growth since mid-2020, with buyers taking advantage of low interest rates. As a result, inventory has hit historically low levels while home prices surpassed $300,000 for the first time ever and continue to rise.
As home prices soar globally, economists are increasingly worried about affordability locking potential homebuyers out of the market and further exacerbating inequality. Still, many economists forecast a strong year for the housing market as vaccinations roll out.
CoreLogic economist Selma Hepp said low inventory is the biggest concern for the housing market’s continued performance.
“Potential sellers may be discouraged by their inability to find a new home and subsequently choose to not list their own home – leading to a vicious cycle of declining for-sale homes,” she said in a statement.
New construction of homes is lagging behind as lumber prices soar. Housing starts dropped 10.3 percent in January and homebuilder sentiment fell for the third time in four months in February.
The S&P CoreLogic Case-Shiller’s 20-city index (minus Detroit) saw a gain of 11.1 percent in January, compared to 10.2 percent in December. The 10-city index was up 10.9 percent year over year, compared to 9.9 percent the month before.
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