U.S. home prices continued to rise through April, despite the onslaught of the COVID-19 crisis.
According to the S&P CoreLogic Case-Shiller Indices, home prices increased 0.5% on an adjusted basis compared with March and were up 4.7% compared with April 2019.
The index’s 10-city and 20-city composites each posted a 0.3% increase compared with the previous month.
Year-over-year, the 10-city composite saw prices increase 3.4%, while the 20-city composite saw prices jump 4.0%.
On an unadjusted basis, the national index posted an increase of 1.1% compared with March, while the 10-city and 20-city composites posted increases of 0.7% and 0.9%, respectively.
In April, all 19 cities – excluding Detroit – reported increases before seasonal adjustment, while 16 of the 19 cities reported increases after seasonal adjustment.
“April’s housing price data continue to be remarkably stable,” says Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, in a statement. “April’s year-over-year gains were ahead of March’s, continuing a trend of gently accelerating home prices that began last fall.”
Lazzara further adds that the results in April “continued to be broad-based.”
“Prices rose in each of the 19 cities for which we have reported data, and price increases accelerated in 12 cities,” he says.
“As was the case in March, we have data from only 19 cities this month, since transactions records for Wayne County, Michigan (in the Detroit metropolitan area) continue to be unavailable,” Lazzara says. “This is, so far, the only directly visible impact of COVID-19 on the S&P CoreLogic Case-Shiller Indices. The price trend that was in place pre-pandemic seems so far to be undisturbed, at least at the national level. Indeed, prices in 12 of the 20 cities in our survey were at an all-time high in April.
“Among the cities, Phoenix retains the top spot for the 11th consecutive month, with a gain of 8.8 percent for April,” he adds. “Home prices in Seattle rose by 7.3 percent, followed by increases in Minneapolis (6.4 percent) and Cleveland (6.0 percent). Prices were particularly strong in the West and Southeast, and comparatively weak in the Northeast.”
So why did home prices continue to rise during the height of the pandemic? Selma Hepp, deputy chief economist for CoreLogic, points to the strong momentum the housing market had prior to the crisis.
“While actions to mitigate the pandemic have varied, everyone has been affected by COVID-19 – and the impact has not been even across local economies or housing markets,” Help says, in a separate statement. “Nevertheless, some of the tailwinds that supported the demand coming into 2020, such as demographics and low mortgage rates, remain intact and may even accelerate demand. Still, supply headwinds, such as declining for-sale inventories, will continue to keep a lid on the number of transactions but also push up home price growth.”
Bill Banfield, executive vice president of capital markets for Quicken Loans, says lack of inventory also helped keep prices artificially high.
“The current Coronavirus pandemic is only exacerbating the already low housing inventory, causing home prices to trend up,” Banfield says in a statement. “While prices plummeted during previous periods of financial distress, currently, purchase demand is strong – keeping them steadily rising. Unless there is a major shift in the amount of people looking to buy a house, it seems owners will continue to see their home’s value increase every month.”