The numbers: The cost of buying a home rose again in October, a closely-watched index showed, and prices rose at the fastest rate in six years, a clear sign that the real estate market is still booming despite a pandemic. angry.
A measure of house prices in 20 big cities rose at an annual rate of 7.9% in October, according to the S&P CoreLogic Case-Shiller price index. It rose from 6.6% in the previous month.
Meanwhile, a larger measure of Case-Shiller, which covers the whole country, showed a similar increase of 8.4% in house prices in the last year. It also rose sharply from 7% in the previous month.
Prices have risen to the fastest clip in 2014 due to low mortgage rates and the influx of people leaving cities to get rid of the coronavirus and find more space. A shortage of homes for sale was also a contributing factor.
On a monthly basis, the Case-Shiller index with 20 cities increased by 1.3% in October.
Read: New federal currencies for coronavirus should keep the economy afloat until vaccines are spread
What happened: Prices have risen in at least 19 of Case-Shiller’s 20 big cities. Detroit was again excluded because not enough information could be collected. A blockade by the state to try to slow the spread of the virus has led to delays in keeping records.
The largest annual increases in house prices took place in Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).
The lowest increases occurred in New York (6%) and Chicago (6.3%) and Las Vegas (6.4%) – cities that were hardest hit by the virus or whose local economies suffered the most. a lot.
Overview: Home sales are not expected to slow down too much, if not even, amid a record outbreak of coronavirus. Very low rates and the growth prospects of the economy, which are gradually returning to normal, are likely to keep demand high.
This is good news for sellers, but bad news for potential home buyers, who are unlikely to get much of the price drop in 2021.
What are they saying? “The data for 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 investment strategy at S&P Dow Jones Indices.
Market reaction: Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
grew in trades on Tuesday. Stocks have reached a record level of optimism that coronavirus vaccines will soon lead to a stronger economic recovery.