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Home Prices Up in Double-Digits

The U.S. housing market has been a positive contributor to the economic recovery. The National Association of Realtors recently reported that existing home sales are near a two-year-high at a 6.22 million seasonally adjusted annual rate, recovering from a 3.9 million rate in May 2020. The Commerce Department reported that new home sales, which were down 33% in April 2020 from January 2020, had recovered to 10-year-high levels of more than 1 million sales per year last August. They remained elevated at 775,000 in February. Building permits were up 70% in February 20201 compared to April 2020, according to the Census Bureau. Though most of these indicators have cooled, housing prices have not. The S&P/Case-Shiller National Home Price Index for January 2021 showed that prices gained 11.2% year-over-year, up from 10.4% in December. Meanwhile, inventory levels are tight: currently there is a low 4.8-month supply of existing homes for sale (the average range is 4.5-7.5 months). On the other side of the pandemic, we expect demand for homes -- with yards between neighbors and plenty of space -- will remain solid, though current trends may continue to cool a bit as interest rates rise. ...  at 775,000 in February. Building permits were up 70% in February 20201 compared to April 2020, according to the Census Bureau. Though most of these indicators have cooled, housing prices have not. The S&P/Case-Shiller National Home Price Index for January 2021 showed that prices gained 11.2% year-over-year, up from 10.4% in December. Meanwhile, inventory levels are tight: currently there is a low 4.8-month supply of existing homes for sale (the average range is 4.5-7.5 months). On the other side of the pandemic, we expect demand for homes -- with yards between neighbors and plenty of space -- will remain solid, though current trends may continue to cool a bit as interest rates rise.   more

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