WASHINGTON (AP) – U.S. house prices rose the highest in more than six years in October as a pandemic-driven purchase price sent the number of available properties for sale to a low record.
The combination of strong demand and limited supply boosted house prices by 7.9% in October compared to 12 months ago, according to the S&P CoreLogic Case-Shiller 20-city house price index on Tuesday. This is the largest annual increase since June 2014.
The outbreak of the coronavirus has forced millions of Americans to work from home and has curtailed other activities, such as eating out, going to the movies or visiting gyms. This leads to more people looking for homes with more space for a home office, a larger kitchen or space to practice.
“Data from the past few 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 of S&P Dow Jones Indices.
All 19 cities had larger price increases in October than in September than in September, Lazzara said. Detroit was unable to fully report its home sales data due to delays related to the closure of a coronavirus.
The biggest price increase was in Phoenix for the 17th month in a row, where house prices rose by 12.7% compared to a year ago. This is followed by Seattle with 11.7% and San Diego with 11.6%.
Home sales declined in November, according to the National Association of Realtors, after rising steadily over the past five months. Even after the decline, sales were almost 26% higher last month than a year ago. Sales were also boosted by low mortgage rates, reflecting the move by the Federal Reserve to keep its short-term rate near zero.
The Realtors said the number of homes for sale dropped to 1.28 million in November to keep just 2.3 months at the current rate of sales. Both figures are record lows.