Nationally, home prices were 16.6% higher than in May 2020, the highest figure for 30+ years from the S&P CoreLogic Case-Shiller report. In April, it increased 14.8% year on year.
The 10-city composite annual increase was 16.4% in May from 14.5% in April. The 20-city composite gained 17% year-over-year, up from 15% the month before. All 20 cities reported higher price increases in the year ending May 2021 compared to the year ending April 2021.
Phoenix, San Diego and Seattle had the highest year-over-year gains among the 20 cities in May. Phoenix led the way with a 25.9% year-over-year price increase, followed by San Diego with a 24.7% increase and Seattle with a 23.4% increase. Chicago, Cleveland and Minneapolis posted the weakest gains, although they were still in double digits.
“A month ago I called April’s performance ‘truly extraordinary’ and this month I find myself running out of superlatives,” said Craig Lazzara, Managing Director and Global Head of Strategy. index investment at S&P DJI. “We previously suggested that the strength of the US real estate market was due in part to the response to the Covid pandemic, as potential buyers move from city apartments to suburban homes. The data for May remains consistent with this assumption. “
Five cities – Cleveland, Dallas, Denver, Seattle and Charlotte, North Carolina – posted their highest annual gains of all time. Price increases in all 20 cities were in the top quartile of historical performance; in 17 cities, the price increases were in the top decile.
Mortgage rates edged down at the start of May and remained within a narrow range throughout the month. Rates have been so low for so long that even small monthly increases have done nothing to bring home prices down.
Sales of new and existing homes have declined in recent months, in large part due to sky-high prices. The inventory of homes for sale has finally started to increase, albeit slowly. An increase in registrations is the only thing at this point that could slow the price gains a bit.
Demand is still high due to the sheer demographics of the larger generation, the millennials, entering their home buying years. Mortgage rates have also fallen again in recent weeks.
“This dynamic confluence of real estate developments helps control price growth as August approaches. Looking ahead, we expect inventories to continue to grow through the fall, changing the typical seasonal trend and keeping real estate activity on a roll, ”said George Ratiu, senior economist at Realtor. com.