A real estate for sale sign indicates the home is “ under contract ” in Washington, DC on November 19, 2020.
Saul Loeb | AFP | Getty Images
December is generally the slowest month for the real estate market, but price increases haven’t slowed down at all in 2020. In fact, they’ve increased at the fastest rate in seven years.
Home prices are up 10.4% nationally from November 2019, according to the S&P CoreLogic Case-Shiller Home Price Indexes.
This is the highest annual growth rate in over six years and a significantly larger gain than in November, when prices were up 9.5%. It also ranks as one of the biggest annual gains in the index’s more than 30 years of history.
The 10-city composite annual increase was 9.8%, up from 8.9% in November. The 20-city composite posted a gain of 10.1%, up from 9.2% the month before. Detroit has been ruled out due to data collection issues related to Covid.
“The 10.4% gain in 2020 marks the best performance in house prices in a calendar year since 2013,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. “From a perspective of over 30 years of S&P CoreLogic Case-Shiller data, the year-to-year change in December ranks in the top decile of all reports.”
Phoenix, Seattle and San Diego continued to post the largest price increases among the 19 cities surveyed. Prices in Phoenix increased 14.4% year-over-year. In Seattle, they rose 13.6% and San Diego saw an increase of 13.0%. Eighteen of 19 cities reported higher price increases in the 12 months ending December 2020 compared to the 12 months ending November 2020.
This data is consistent with the view that Covid has encouraged potential buyers to switch from city apartments to suburban homes. It may indicate a secular shift in demand for housing, or may simply represent an acceleration of moves that would have had take place over the next few years anyway, ”added Lazzara.
Home prices began to register big gains last summer, as demand for Covid from home housing culture descended in the housing market. Record supply and low mortgage rates have sparked home bidding wars across the country.
Mortgage rates rose sharply last week, which will reduce future affordability in the spring 2021 market. Prices are generally lower than sales, so if sales suffer, the market is unlikely to experience a significant cooling of prices for several months.