According to the most recent report from S&P CoreLogic Case-Shiller Indices released by S&P Dow Jones and CoreLogic, home prices increased in September at their fastest pace in more than three years.
The Case-Shiller National Home Price NSA Index, which covers all nine U.S. census divisions, demonstrating date from the last 12 months, prove that home prices increased 6.2% nationally, the highest annual rate of increase since June 2014.
In 13 of the 20 cities tracked by the index, yearly price gains in September were faster than in August, which had an increase of 5.9%.
“Home prices continued to rise across the country with the S&P CoreLogic Case-Shiller National Index rising at the fastest annual rate since June 2014,” said David Blitzer, S&P Dow Jones Indices managing director and chairman of the Index Committee. “Home prices were higher in all 20 cities tracked by these indices compared to a year earlier; 16 cities saw annual price increases accelerate from last month. Strength continues to be concentrated in the west with Seattle, Las Vegas, San Diego and Portland seeing the largest gains.”
Home buyers are desperately bidding up prices because so few properties are available. The number of homes for sale in September was the fewest for that month on records dating back to 2001, according to the National Association of Realtors. And home builders aren’t yet putting up enough new homes to reduce the supply crunch.
Home prices rose in all 20 cities. The smallest gains were in Washington D.C., where prices rose 3.1 percent; Chicago, with a 3.9 percent gain; and Miami, at 5 percent.
Before seasonal adjustment, 15 of the top 20 cities saw an increase in home prices from the month before. However, after seasonal adjustment, all 20 cities saw an increase. What’s more, experts explained these home price increases will not be letting up anytime soon.
“Most economic indicators suggest that home prices can see further gains,” Blitzer said. “Rental rates and home prices are climbing, the rent-to-buy ratio remains stable, the average rate on a 30-year mortgage is still under 4%, and at a 3.8-month supply, the inventory of homes for sale is still low.”
Unemployment is low and the economy is growing at a solid clip, fueling demand for homes. Mortgage rates also remain historically low, with the average rate on a 30-year mortgage below 4 percent.
Yet Americans are remaining in their homes longer, according to a recent survey by the Realtors. Many are reluctant to sell because there are so few other homes to buy.
“The overall economy is growing with the unemployment rate at 4.1%, inflation at 2% and wages rising at 3% or more,” Blitzer said. “One dark cloud for housing is affordability – rising prices mean that some people will be squeezed out of the market.”
According to Crain’s, when compared to other cities, Chicago’s rate of recovery has seen some major improvement in the recent months. While our local figure was placed near the bottom of a list of 20 cities for quite a long time between 2015 and 2016, recently it has been rapidly outgrowing many of them. Seven of the 20 showed growth smaller than Chicago’s in January.
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.