Home prices have begun to show signs of easing up as the S&P CoreLogic Case-Shiller national home price index rose 19.5% year-over-year in September, down from 19.8% the previous month. The 10 city composite increased 17.8% year-over-year in September, down from 18.6% in the previous month, and the 20 city composite increased 19.1% year-over-year, down from 19.6% in the previous month.
Phoenix, Arizona, and Tampa and Miami in Florida saw the biggest year-over-year gains among the 20 cities in September, with increases of 33.1%, 27.7% and 25.2%. The smallest increases were 11.8% in Chicago, 12.8% in Minneapolis, Minnesota and 13.7% in Washington D.C.
In 14 of the 20 cities, price growth decreased while six of the 20 cities reported higher price increases in the year ending September 2021 compared to the year ending August 2021.
If I had to choose only one word to describe September 2021's housing price data, the word would be deceleration. The pace of price increases declined slightly in September, but housing prices continued to show strength, said Craig Lazzara, S&P Dow Jones Indices managing director. The strength in the U.S. housing market is driven by households reaction to the Covid epidemic, as potential buyers move from urban apartments to suburban homes. The current home sales rose 0.8% in October to a seasonally adjusted rate of 6.34 million units, the fastest pace since January, while the number of homes that are under contract to be sold increased by 7.5% to 125.2 in October, according to the latest home price data.
The median existing home price increased 13.1% year-over-year to $353,900, marking a record 116 straight months of year-over-year increases, while the median existing single-family home price increased 13.5% year-over-year to $360,800, and the existing condo price increased 8.7% year-over-year to $296,700. Individual investors or second- home buyers purchased 17% of homes in October, up from 13% in September and 14% in October 2020, up from 29% in October, up from 28% in September and 32% in October 2020.
The total housing inventory is low, falling by 0.8% month-over-month and 12% year-over-year in October to 1.25 million units. Unsold inventory, which is at a 2.4 month supply at the current sales pace, is unchanged from the previous month and is down from 2.5 months a year ago.
The housing market is expected to remain robust, but the National Association of Realtors chief economist Lawrence Yun predicts home prices will rise at a gentler pace over the course of the next several months and expects milder demand as mortgage rates increase. The average rate on a 30 year fixed-rate mortgage was 3.1% as of Nov. 24, according to Freddie Mac.