U.S. home prices are rising at the fastest pace in more than 30 years

Home price growth in the United States accelerated in April at the fastest pace in more than three decades as strong demand for housing continued to face a shortage of residential property.

The national price index for S&P Case-Shiller, which covers the nine U.S. census divisions, rose 14.6% year-on-year in April, according to data from Tuesday. This followed a 13.3% annual jump in March and was “the highest reading in more than 30 years,” according to the report.

Meanwhile, the 20-city compound, which covers U.S. metropolitan areas, including Dallas, Miami, New York and San Francisco, rose 1.6% year-over-year and 14.9% year-on-year.

This was the largest annual increase since December 2005 and compared to expectations of an annual increase of 14.5%, according to economists surveyed by Refinitiv.

Phoenix, San Diego and Seattle posted the highest year-over-year gains among the 20 cities in April.

“April’s performance was truly extraordinary,” said Craig Lazzara, CEO and head of global investment strategy at S&P Dow Jones Indices.

While the boom has been driven in part by demand for pandemic-related suburban homes, he said it could also “represent an acceleration in purchases that would have occurred in the coming years anyway.”

U.S. home prices rose last year as Americans took advantage of record-low mortgage rates and took homes to the suburbs. This demand, combined with a scarce supply of housing, pushed prices up to record levels. This was further exacerbated earlier this year by a sharp rise in timber costs.

Rising home prices are deterring first-time buyers, economists say, though some expect demand for suburban property to decline as fears of pandemics fade.

There are also some indications that the housing inventory is starting to grow. The U.S. Department of Commerce said last week supply of new houses sales rose 15,000 in May to 330,000, 5.8% more than a year ago. This represented a supply of 5.1 months at the current pace of sales, compared to 3.6 months in January.

“Inventory rises in recent weeks suggest that a respite may begin to form from these market conditions,” said Matthew Speakman, an economist at Zillow. “But the return to a balanced market is a long way off, and there are few signs, if any, that the appreciation in house prices will start to decline soon.”

Going up housing prices they have also caught the attention of Federal Reserve officials.

This week Eric Rosengren, president of the Boston Federal Reserve, he told the Financial Times that the US cannot afford a “boom and turn cycle” in the real estate market that would jeopardize financial stability. He said it had become commonplace for cash-only buyers to prevail in bidding tenders in Boston.

Other Fed officials, including Dallas Fed Chairman Robert Kaplan, have urged the central bank to reassess its support for the real estate market through its $ 40 billion monthly purchases in mortgage-backed securities. agencies.