US Home Prices See Highest Jump in Over 6 Years

Couple removing glasses from box in living room at new home
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The housing market has been a bright spot throughout the pandemic, and strong demand from homebuyers drove U.S. home prices up in October. The October 8.4% annual gain was the highest increase since March 2014, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.

October’s increase was up from 7.0% in September, according to Tuesday’s report. The 20-City Composite posted an annual gain of 7.9% in October, up from 6.6% the prior month, while the 10-City Composite increased 7.5%, up from 6.2% in September, the report showed.

Phoenix saw a 12.7% gain, the highest among the 19 cities tracked in the index, though Seattle and San Diego were not far behind, with increases of 11.7% and 11.6%, respectively. All 19 cities posted higher price increases in October over the prior 12 months than they did in September. (Detroit, which is normally included in the index, was left off the October index due to COVID-related reporting issues.)

“The surprising strength we noted in last month’s report continued into October’s home price data,” Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said in a statement. “Since June, our monthly readings have shown accelerating growth in home prices, and October’s results emphatically emphasize that trend.”

While home prices were up in October, home sales fell by November snapping a five-month streak. The median existing home price in November was $310,800, lower than it was in October, but still up 14.6% from the same time last year. Housing inventory also fell in November to a record low, with homes typically selling in just 21 days, according to the National Association of Realtors (NAR).

High demand from homebuyers looking to trade densely populated cities for spacious suburbs during the pandemic has driven home prices up and inventory down.

“Although the full history of the pandemic’s impact on housing prices is yet to be written, the data from the last several months are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” Lazzara said.

Even as coronavirus cases reach new heights this winter and some economists believe the housing market could overheat, others think that it’ll be the strongest sector in 2021.

"Circumstances are far from being back to the pre-pandemic normal," Lawrence Yun, chief economist for the NAR, said in a statement. "However, the latest stimulus package and with the vaccine distribution underway, and a very strong demand for homeownership still prevalent, robust growth is forthcoming for 2021."