WASHINGTON (AP) – US home prices rose the most in more than six years in October as a pandemic-fueled buying storm drives the number of homes for sale to record lows.
That combination of strong demand and limited supply drove home prices in October by 7.9% compared to 12 months ago, according to the S&P CoreLogic Case-Shiller 20-city home price index. That is the largest annual increase since June 2014.
The coronavirus outbreak has forced millions of Americans to work from home, and it has limited other activities such as eating out, going to the movies, or attending gyms. As a result, more people are looking for homes with more space for a home office, a larger kitchen or space for sports.
“Data from recent months is consistent with the view that COVID has been encouraging potential buyers to move from city apartments to suburban homes,” said Craig Lazzara, Managing Director at S&P Dow Jones Indices.
All 19 cities reported larger annual price hikes in October than in September, Lazzara said. Detroit was unable to fully report its home sales due to delays related to a coronavirus blockage.
The biggest price gain was in Phoenix for the 17th consecutive month, where house prices rose 12.7% from a year ago. It was followed by Seattle with 11.7% and San Diego with 11.6%.
Home sales fell in November, according to the National Association of Realtors, after a steady rise over the past five months. Even after the decline, sales last month were nearly 26% higher than a year ago. Sales were also boosted by low mortgage rates, reflecting the Federal Reserve’s measures to keep its benchmark near zero in the short term.
The number of homes for sale fell to 1.28 million in November, the brokers said, enough to last only 2.3 months at the current rate of sale. Both numbers are lows.