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Limited housing supply and strong demand continue to drive up house prices. According to the S&P CoreLogic Case-Shiller National Home Price Index, house prices in March were 13.2% higher than in March 2020 and 12% higher in February. It is also the 10th consecutive month of house price growth.
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Despite these uncertain economic times, the residential housing market has been booming over the past year. As low mortgage rates encourage more buyers to enter the competitive market, the housing stock has not had time to recover, which has pushed up prices. The last time the US real estate market saw such a gain was in December 2005, and it was one of the biggest gains in the index’s 30-year history.
The index recorded price increases in all 20 cities, with increases in March in each city above the city’s median level. According to the report, the cities with the biggest price increases remain Phoenix, San Diego and Seattle. Phoenix leads with a 20% year-over-year price increase, followed by San Diego with a 19.1% increase, while Seattle prices are up 18.3%.
Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI, explained that the data is consistent with the theory that the coronavirus pandemic has caused a shift in where people choose to invest. live, which he believes could become permanent.
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“This data is consistent with the hypothesis that COVID encouraged potential buyers to switch from city apartments to suburban homes. This demand may represent buyers who have stepped up purchases that would have occurred anyway over the next few years. Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the housing demand curve. It will take more time and data to analyze this issue, ”he said.
Mortgage rates for the week ending May 20 were 3% for a 30-year fixed-rate mortgage, up from 2.94% the week before and 3.24% the year before, according to Freddie Mac’s primary mortgage market investigation. Rates have hovered around 3% since March.
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