The numbers: The cost of buying a home soared again in October, showed a closely followed index, and prices rose at the fastest rate in six years in a clear sign that the housing market is still on the rise despite a violent pandemic.
A measure of house prices in 20 major cities increased at a rate of 7.9% per year in October, according to the S&P CoreLogic Case-Shiller price index. This is 6.6% higher in the previous month.
A broader measure by Case-Shiller that covers the entire country, however, showed a similarly large 8.4% increase in house prices last year. This also increased dramatically from 7% in the previous month.
Prices have increased at the fastest pace since 2014, due to record mortgage rates and a flow of people leaving cities to escape the coronavirus and find more space. The lack of homes for sale has also contributed to this.
On a monthly basis, the Case-Shiller 20-city index rose 1.3% in October.
Read: New federal money for coronavirus should keep the economy afloat until vaccines are disseminated
What happened: Prices have risen in at least 19 of the 20 major cities monitored by Case-Shiller. Detroit was excluded again because it was not possible to collect enough information. A state lock to try to slow the spread of the virus has led to delays in record keeping.
The biggest annual increases in house prices occurred in Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).
The smallest increases occurred in New York (6%) and Chicago (6.3%) and Las Vegas (6.4%) – cities that were hard hit by the virus or whose local economies were the most affected.
General picture: Home sales are not expected to decline much, even in the midst of a record coronavirus outbreak. The very low rates and the growth prospects for the economy of gradual return to normal should keep demand high.
This is good news for sellers, but bad news for potential home buyers, who are unlikely to get a significant price cut in 2021.
What are they saying? “Data from the past few months is consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices.
Market reaction: The DJIA of the Dow Jones Industrial Average,
and S&P 500 SPX,
increased in Tuesday’s negotiations. Stocks have reached record levels with optimism that coronavirus vaccines will soon lead to a stronger economic recovery.