U.S. home prices rose in October at their fastest pace in more than six years as a stampede out of city centers resulted in the fewest properties listed for sale on record.
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Home prices rose 8.4% year over year in October, according to the national Case-Shiller index, the highest since March 2014. Prices are now 25% above the peak that was reached ahead of the 2008 financial crisis.
“The data from the last several months are consistent with the view that COVID-19 has encouraged potential buyers to move from urban apartments to suburban homes,” Craig Lazzara, managing director at S&P Dow Jones Indices, said in a statement.
The 20-city composite index found prices advanced 7.9% from a year ago in October, up from the previous month’s 6.6% gain.
All 19 cities that reported saw month-over-month price increases in October. Local reporting delays in Wayne County, Mich., due to COVID-19 restrictions meant Case-Shiller was not able to report an accurate reading for the Detroit metro area in October.
Phoenix reported the strongest annual gain with prices up 12.7%, followed by Seattle and San Diego, which saw price increases of 11.7% and 11.6%, respectively.
New York reported the smallest gain, up 6% from a year ago. Chicago was next with a 6.3% increase.
The upcoming year will provide new challenges for both the economy and the housing market as new COVID-19 restrictions are enforced, according to Selma Hepp, deputy chief economist at CoreLogic.
However, the recently approved $900 billion stimulus package and policymakers potentially extending foreclosure moratoriums will “help housing market demand and ensure continued home price growth,” she said.