According to the latest data from property analytics provider CoreLogic, home prices rose by 6.7 percent in September. Such numbers are a 1.1 percent jump from August and an annual increase unseen since May 2014.
The reasons for such a jump, even if all the economic disruption caused by the pandemic initially indicated a slowdown, has several interconnected reasons: record-low mortgage rates, pent-up demand and a lack of new inventory on the market.
According to a joint study by the National Association of Realtors and U.S. Census Bureau, the number of homes currently on the market is the lowest in years — 40 percent of what was seen in September 2008 and 75 percent of what was seen in September 2000.
“Housing continues to be a bright spot during an otherwise challenging economic time for many U.S. households,” Frank Martell, president and CEO of CoreLogic, said in a prepared statement. “Those in sectors that weathered the transition to remote work successfully are now able to take advantage of low mortgage rates to purchase a home for the first time or to trade-up to a larger home.”
Growth varied greatly in different parts of the country. In Phoenix, prices jumped by 11.1 percent while in New York-Jersey City-White Plains area they rose by only 0.3 percent. As states, Idaho, Arizona and Maine saw the highest growth at 11.8, 11 and 11 percent, respectively. According to CoreLogic’s predictions, growth is expected to cool somewhat from such explosive numbers but continue to hold steady into the new year.
“COVID has contributed to the acute shortage of inventory as the pace of new construction slowed and older prospective sellers postponed listing their homes until after the pandemic,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a prepared statement. “Once the pandemic passes or a vaccine is widely administered, we should see a noticeable pick-up in for-sale homes. And if the economy’s recovery is sluggish next year, distressed sales may also add to market inventory.”