A home sale sign for real estate shows the home is under contract on November 19, 2020 in Washington, DC.
Saul Loeb | AFP | Getty Images
December is usually the slowest month for the property market, but price gains haven’t slowed a bit in 2020. In fact, they rose at the fastest pace in seven years.
House prices rose 10.4% nationwide from December 2019, according to the S&P CoreLogic Case-Shiller House Price Indices.
This is the strongest annual growth rate in over six years, and a significantly stronger gain than in November, when prices rose 9.5%. It is also one of the largest annual increases in the index’s more than 30-year history.
The annual increase of 10 cities was 9.8% after 8.9% in November. The 20-city network recorded an increase of 10.1% compared to 9.2% in the previous month. Detroit has been banned due to Covid-related data collection issues.
“The 10.4% increase 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 for S&P Dow Jones Indices. “From the perspective of more than 30 years of S&P CoreLogic Case-Shiller data, the December year-over-year change is in the top decile of all reports.”
Phoenix, Seattle and San Diego continued to see the largest price increases among the 19 cities studied. In Phoenix, prices rose by 14.4% compared to the previous year. In Seattle they increased by 13.6% and in San Diego by 13%. Eighteen of the 19 cities reported higher price increases in the twelve months to December 2020 than in the twelve months to November 2020.
“These data are consistent with the view that Covid has encouraged potential buyers to move from urban apartments to suburban homes. This could indicate a mundane shift in housing demand or simply an acceleration in removals that has taken place over the next several years would have years anyway, “said Lazzara.
House prices started to see big gains last summer as Covid-driven demand from the culture of living declined in the real estate market. Record low supply combined with record low mortgage rates led to bidding wars against homes across the country.
Mortgage rates rose sharply last week, which will hurt affordability in the spring 2021 market. Prices generally lag behind sales. So if sales are suffering, prices in the market are unlikely to cool significantly over several months.
Correction: The national 10.4% increase in house prices has been compared to December 2019. An earlier version had the wrong month.