December saw a double-digit annual increase for home prices across the country, according to the Case-Shiller Home Price Index from S&P Dow Jones Indices and CoreLogic.
The nine U.S. Census regions showed a 10.4% annual gain in December, up from 9.5% in the previous month.
The 10-city composite annual increase came in at 9.8%, up from 8.9% in the previous month. The 20-city composite posted a 10.1% year-over-year gain, up from 9.2% in the previous month.
Prices rose in all 19 reporting cities, with Seattle, Washington, D.C. , Boston, Cleveland, Miami, and Phoenix each showing a 1.5% increase.
Digging deeper into the numbers, Phoenix saw a 14.4% year-over-year price increase, Seattle saw a 13.6% increase and San Diego saw a 13.0% increase. Eighteen of the 19 cities reported higher price increases in the year ending December 2020 versus the year ending November 2020.
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The Federal Housing Finance Agency also reported a 1.1% increase, noting home prices rose in all nine of the report’s regions in December 2020. The East-South-Central (+1.7%) and Mountain (+1.4%) regions showed the largest month-on-month increase.
Industry experts didn’t know what to expect when the COVID-19 pandemic hit the country last March, and initially, price growth decelerated in May and June. Then, mortgage rates plummeted to historic-lows, opening the homebuying floodgates and propelling prices skyward.
Rates have slowly climbed back towards 3% in the past few months, but inventory is still low, keeping prices high. Finally, lumber and other building materials are still scarce, forcing construction companies to delay projects and prevent an inventory build-up.
Of course, this is all fantastic news for anyone looking to sell their home in 2021.
December 2020’s 10.4% gain “marks the best performance of housing prices in a calendar year since 2013,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones. “From the perspective of more than 30 years of S&P CoreLogic Case-Shiller data, December’s year-over-year change ranks within the top decile of all reports.”
Zillow Economist Matthew Speakman added that homes in some major markets are going under contract more than a month faster than they were at this time last year.
“This forces would-be buyers to move very quickly to put an offer in on a home they desire, increases the likelihood that multiple offers will be fielded by the seller, and ultimately places more upward pressure on prices,” Speakman said.
Last year also saw a massive exodus of people moving from urban apartments into larger, suburban homes as work-from-home and contactless interaction became the norm in the midst of the pandemic.
“This may indicate a secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway,” Lazzara said. “Future data will be required to address that question.”
