Home prices in the US increased at a near record rate

• Home prices in the US rose in August by a near record amount from the previous year.
• The 20-city home price index soared 19.7% in August, according to S&P CoreLogic Case-Shiller.
• Home sales have been healthy for most of this year, according to official data.

Housing prices in the United States rose by a near-record amount in August from a year earlier, as Americans eager to buy homes were surprised by the prices of many properties.

The S&P CoreLogic Case-Shiller 20-city home price index jumped 19.7% in August compared to a year earlier. That rise is just below the 20% jump in July, which was the biggest gain on record dating back to 2000. Home prices are now at all-time highs in all 20 cities in the index.

Home sales and prices skyrocketing

Home sales have been healthy for most of this year, fueled by many people’s continued desire for more room and for the coronavirus pandemic to pass. Mortgage rates have also been historically low, though they have risen in recent weeks, and many Americans have become richer since the pandemic as stock prices have risen steadily, allowing them to buy a new home.

Phoenix reported the largest price increase among the 20 cities that make up the index, as it has for more than two years. Home prices increased 33.3% in August compared to the previous year. San Diego home prices rose 26.2%, the second highest, and Tampa home prices rose 25.9%, the third highest gain.

A recovering market

There are signs that last year’s rapid price gains are cooling a bit. August price increases, compared to a year ago, were slightly lower than in July, the first decrease in annual price increases since June 2020. And price increases slowed in 12 of the 20 cities in the Case-Shiller CoreLogic index.

«The slowdown in the acceleration of home prices suggests that buyer fatigue is occurring, especially among higher-priced homes,» said Selma Hepp, deputy chief economist at CoreLogic.

Housing availability

Mortgage rates rose to 3.1% last week, the highest since April, according to mortgage buyer Freddie Mac. That increase likely pushed more people to shop for and buy houses, before rates soar even higher. Existing home sales increased 7% in September.

Potential buyers still have relatively few homes to choose from, with just 1.27 million homes on the market in September, down 13% from last year. That has pushed many buyers to act quickly. Homes are typically sold within 17 days of going on the market, according to the National Association of Realtors, and 86% of homes sold in September were on the market for less than 30 days.

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