The numbers: The cost of buying a home rose again in October, a closely monitored index found, and prices rose the fastest in six years, a clear sign that the housing market is still booming despite a raging pandemic.
According to the S&P CoreLogic Case-Shiller price index, a measure of home prices in 20 major cities rose 7.9% annually in October. That is up from 6.6% in the previous month.
A broader Case-Shiller measure covering the entire country, meanwhile, showed an equally large 8.4% increase in house prices over the past year. That is also up sharply from 7% in the previous month.
Prices have risen fastest since 2014 due to record-low mortgage rates and an influx of people leaving cities to escape the coronavirus and find more space. A shortage of houses for sale has also contributed to this.
On a monthly basis, the Case-Shiller 20 city index rose 1.3% in October.
Read: New money from the federal coronavirus should keep the economy going until vaccines are widespread
What happened: Prices soared in at least 19 of the 20 major cities that Case-Shiller followed. Detroit was again excluded because not enough information could be collected. A state lock to try to slow the spread of the virus has resulted in data tracking delays.
The largest annual house price increases have been in Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).
The smallest increases were in New York (6%) and Chicago (6.3%) and Las Vegas (6.4%) – cities that have been hit hard by the virus or where the local economy has suffered the most.
Big picture: Home sales are not expected to slow down much or at all, even during a record coronavirus outbreak. Super-low rates and the growing prospects of the economy gradually returning to normal are likely to keep demand high.
That’s good news for sellers, but bad news for potential home buyers, who are unlikely to see a major price drop in 2021.
What do they say? “The data for the past few months is consistent with the view that COVID has been encouraging potential buyers to move from city apartments to suburban homes,” said Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices.
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
surged in trades on Tuesday. Stocks have skyrocketed on optimism that coronavirus vaccines will soon lead to a stronger economic recovery.