Annual U.S. home-price growth hit an all-time high in June, bounding 18.6% year over year, according to the S&P CoreLogic Case-Shiller National Home Price Index.
That’s the fastest pace of yearly home-price growth since the index first began tracking the metric in 1987. The previous record was 16.8% set this past May — and the preceding all-time high was 14.8% set one month before that.
With the homebuying market sporting a large, motivated buyer pool and beset by short supply, it isn’t taking long before price-growth records are being set and reset these days.
“June 2021 is the third consecutive month in which the growth rate of housing prices set a record,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI. “The National Composite Index marked its thirteenth consecutive month of accelerating prices. … The last several months have been extraordinary not only in the level of price gains but in the consistency of gains across the country.”
The national index’s accompanying 10- and 20-city composite indices, which track price growth in the country’s largest metro areas, likewise saw large year-over-year increases. These indices ended June with yearly price growth of 18.5% and 19.1%, respectively — both all-time highs. All 20 cities tracked by the indices saw prices rise, and all 20 saw gains accelerate more in the 12 months ending in June than they did in the 12 months ending in May.
Home prices in 19 of these 20 cities (all but Chicago) are now at record highs, according to Case-Shiller data, and many cities saw their fastest rates of annual price growth ever, including Boston, Charlotte, Cleveland, Dallas, Denver and Seattle. Phoenix, with a 29.3% yearly gain, continued to lead all cities in price growth for the 25th consecutive month, followed by San Diego (27.1%) and Seattle (25%).
With the COVID-19 delta variant surging, the health crisis continues to impact the decisionmaking of U.S. homebuyers, Lazzara said.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes,” he explained. “June’s data are consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years.
“Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.”
CoreLogic deputy chief economist Selma Hepp attributed the sizable gain to “tireless homebuyer demand,” although she suggested that other fundamentals may start to put the brakes on price growth sooner rather than later.
“While the housing market feels like it has legs that never get tired, inventory and affordability constraints are still expected to put a damper on price growth,” she said. “Some early data suggests that the buyer frenzy experienced this spring is tapering, though many buyers still remain in the market.
Nevertheless, less competition and more for-sale homes suggest we may be seeing the peak of home-price acceleration. Going forward, home-price growth may ease off but stay in the double digits through year-end.”