Steel Markets

Home Price Growth Still Full Speed Ahead

February 23, 2021

Home prices continued to accelerate through December, culminating in the highest annual gain in seven years. The National Composite Index for the S&P CoreLogic Case-Shiller Indices rose 10.4% in December compared to a year ago.

“As COVID-related restrictions began to grip the economy in early 2020, their effect on housing prices was unclear,” said Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. “Price growth decelerated in May and June, and then began a steady climb upward, and December’s report continues that acceleration in an emphatic manner. 2020’s 10.4% gain marks the best performance of housing prices in a calendar year since 2013. 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.”

The 20-city index (minus the Detroit area) rose 10.1% year-over-year up from 9.2% in November. COVID- related delays have impacted reporting in Wayne Country, Mich., resulting in insufficient data for inclusion in the indices.

Phoenix led the country with the fastest growing prices for the 19th consecutive month with a gain of 14.4 percent. Seattle and San Diego followed with annual gains of 13.6% and 13%, respectively.

Analysts are not seeing an end to price growth, at least in the near term. Low inventories of both existing and new builds are heating up competition among buyers eager to take advantage of low mortgage rates. Until supply catches up with demand, pricing is expected to continue its upward trend.

“These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” added Lazzara. “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. Future data will be required to address that question.”