"This month I find myself running out of superlatives"
US home prices skyrocketed by 16.6% year over year and shot up 2.14% from April to May – the fastest month-over-month increase ever recorded by the S&P CoreLogic Case-Shiller US National Home Price NSA Index.
“A month ago, I described April’s performance as ‘truly extraordinary,’ and this month I find myself running out of superlatives,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI. “The 16.6% gain is the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data.”
This acceleration is also reflected in the 10- and 20-City Composites, up 16.4% and 17% year over year. The highest annual gains in May were in Phoenix (25.9%), San Diego (24.7%), and Seattle (23.4%). All 20 cities posted higher 12-month price increases in May than in the previous month.
“We have previously suggested that the strength in the US housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes. May’s data continue to be consistent with this hypothesis,” Lazzara said. “This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.”
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CoreLogic deputy economist Selma Hepp added that consumer demand supported by people’s accumulated savings and solid mortgage underwriting continue to fuel the spurts of home price growth.
“Both are markedly different than the home price run-up seen in 2005. Nevertheless, improvements in availability of new listings will help release the tremendous pressure that competing buyers have put on home prices and home price growth, which is likely to slow by the end of the summer,” Hepp said.
