U.S. home prices jumped in October by the most in more than six years as a pandemic-fueled buying rush drives the number of available properties for sale to record lows.
That combination of strong demand and limited supply pushed home prices up 7.9% in October compared with 12 months ago, according to Tuesday’ss. That’s the largest annual increase since June 2014.
The coronavirus outbreak has forced millions of Americans to work from home and it’s curtailed other activities like eating out, going to movies or visiting gyms. That’s leading more people to seek out homes with more room for a home office, a bigger kitchen, or space to work out.
“The data from the last several months are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, Managing Director at S&P Dow Jones Indices.
All 19 cities reported larger year-over-year price gains in October than in September, Lazzara said. Detroit wasn’t able to fully report its home sales data because of delays related to a coronavirus lockdown.
The biggest price gain was in Phoenix for the 17th straight month, where home prices rose 12.7% from a year ago. It was followed by Seattle with 11.7% and San Diego at 11.6%.
Home sales slipped in November, according to the National Association of Realtors, after rising steadily for the previous five months. Even after the decline, sales were nearly 26% higher last month compared with a year ago. Sales have also been boosted by low mortgage rates, which reflect the Federal Reserve’s moves to keep its benchmark short-term rate at nearly zero.
The number of homes for sale fell to 1.28 million in November, the Realtors said, enough to last just 2.3 months at the current pace of sales. Both figures are record lows.