The latest findings of the S&P CoreLogic Case-Shiller Indices revealed that annual home price growth hit 7.0% in September, shattering expectations and reaffirming the strength of the housing market amidst the COVID-19 pandemic.
The big September gain was up from August’s 5.8% yearly increase, bringing the national Case-Shiller price index to yet another record high. September’s surge was the fastest year-over-year growth rate posted by the index since May 2014, and the index is now 23% higher than its pre-Great Recession zenith.
Month to month, the national index also picked up speed, increasing 1.2% from August, the strongest pace since spring of 2013.
The robust leap elicited an enthusiastic response from Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
“Housing prices were notably — I am tempted to say ‘very’ — strong in September,” Lazzara quipped in a statement.
“This month’s increase may reflect a catch-up of COVID-depressed demand from earlier this year,” he added. “It might also presage future strength, as COVID encourages potential buyers to move from urban apartments to suburban homes. The next several months’ reports should help to shed light on this question.”
The sub-indices tracking prices in the country’s largest metros also showed September strength. The 10-City Composite saw an annual increase of 6.2%, up from 4.9% in the month prior. The 20-City Composite logged a yearly improvement of 6.6%, up from 5.3% the previous month.
Month over month, the 10- and 20-City Composites posted September growth of 1.3% and 1.2%, respectively, before seasonal adjustment. On an adjusted basis, the 10-City Composite posted a 1.2% gain, while the 20-City Composite saw a 1.3% increase.
Among cities in the sub-indices, Phoenix, Seattle and San Diego continued to lead the way in annual price gains. Phoenix’s 11.4% year-to-year increase led the way in September, followed by Seattle at 10.1% and San Diego at 9.5%. Price growth was broad-based, with all 19 cities for which the indices had figures reporting price increases year over year in September. Data collection for Detroit continues to lag due to complications from the COVID-19 pandemic.
Stout fundamentals continue to underpin national price growth, said CoreLogic deputy chief economist Selma Hepp, with favorable market conditions buoyed by supportive demographic factors.
“While the exploding COVID-19 infection rates suggest weighty economic uncertainty remains, housing markets continue to receive positive tailwinds, including the largest cohort of millennials, age 28 to 30 (about 15 million), are coming closer to the typical, first-time, homebuying age.
“Additionally, mortgage rates are expected to remain at or below 3% into 2021. These two factors will bolster the homebuying market and continue propping up home price growth.”