High demand, low inventory drive November home-price growth

Home prices heated up in November after slowing for much of last year, according to CoreLogic and the S&P Dow Jones Indices.

The latest S&P CoreLogic Case-Shiller National Home Price Index revealed a 3.5% annual home price gain nationwide during the month, up from 3.2% in the month prior. With that increase, home prices are 15% above their pre-financial crisis peak and 59% above their low point in February 2012.

The national index’s component indices also saw annual increases, with the 10-City Composite posting a 2.0% gain (up from 1.7% in October) and the 20-City Composite logging a 2.6% gain (up from 2.2%).

Month over month, the national index grew 0.2% pre-seasonal adjustment, while the 10-City and 20-City composites both increased 0.1% monthly on a non-adjusted basis. After seasonal adjustment, all three indices posted a 0.5%.

Craig J. Lazarra, managing director and global head of index investment strategy at S&P Dow Jones Indices, called the market in November “stable.”

“As was the case last month, after a long period of decelerating price increases, the National, 10-city, and 20-city Composites all rose at a modestly faster rate in November than they had done in October. This increase was broad-based, reflecting data in 15 of 20 cities. It is, of course, still too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend.”

Zillow economist Matthew Speakman said that persistent inventory shortages are fueling simmering prices.

“The main driver in this acceleration is clearly the ongoing and historic lack of for-sale inventory, though a strong job market, stabilizing geopolitical tensions and still-low mortgage rates have played their part,” he explained. “Even taking seasonal factors into consideration, the number of homes available for sale fell consistently through the latter part of 2019 and now sits near the lowest level on record.

“This lack of homes has made competition among buyers — buoyed by otherwise favorable economic conditions — even more fierce, in turn helping to push up prices even faster. Indeed, homebuying activity has picked up in recent months, with sales of existing homes reaching their highest level in nearly two years in December.”

Phoenix, Charlotte and Tampa reported the highest year-over-year increases in November among the cities tracked by CoreLogic. Phoenix topped the list for a sixth straight month with a 5.9% year-over-year gain, followed by Charlotte at 5.2% and Tampa at 5.0%. Fifteen of the 20 cities saw larger price increases in the year ending November 2019 compared to the year ending October 2019.


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