In April, home prices in the United States experienced the most significant surge in over 30 years. The S&P CoreLogic Case-Shiller index, reflecting property values nationwide, recorded a remarkable 14.6% year-on-year increase, marking the largest gain in data dating back to 1988. This substantial rise followed a 13.2% increase in March and marked the 11th consecutive month of accelerating price gains.
The surge was even more pronounced in 20 major US cities, where home prices soared by 14.9%, surpassing the median estimate in a survey of Bloomberg economists. This surge represented the most substantial increase since 2005.
Craig J. Lazzara, the global head of index investment strategy at S&P Dow Jones Indices, described April’s performance as “truly extraordinary.” He highlighted that the strength in the US housing market appears to be, in part, a response to the Covid pandemic, with potential buyers shifting from urban apartments to suburban homes.
Factors such as low mortgage rates and a demand for properties in suburban areas have been propelling the US housing market for over a year. However, the shortage of available homes has contributed to escalating prices, making it challenging for many buyers to find affordable properties. This trend was reflected in a fourth consecutive monthly decline in the sales of previously owned homes in the US in May.
Despite these challenges, it is anticipated that home prices will remain elevated. Builders continue to face obstacles such as high materials prices, supply shortages, and a limited number of skilled workers as they work to complete new homes.
Matthew Speakman, an economist at Zillow Group Inc., noted, “The forces that have propelled home price growth to new highs over the past year remain in place and are offering little evidence of abating.” He emphasized that the historically small number of available homes for sale, coupled with the heightened demand for housing, contributes to the ongoing strength in home prices.