U.S. home prices saw the largest largest annual gain in more than six years in December, fueled by lack of supply, record demand and low mortgage rates, according to CoreLogic.
Nationally, home prices increased 9.2% compared with December 2019.
Month-over-month, home prices increased 1% compared with November 2020.
“At the start of the pandemic, many braced for a Great Recession-era collapse of the housing market,” says Frank Martell, president and CEO of CoreLogic, in a statement. “However, market conditions leading into the crisis — namely low home supply, desire for more space and millennial demand — amplified the rapid acceleration of home prices.”
However, these accelerating home prices could lead to affordability challenges in 2021. For instance, in San Diego, home prices increased 10.4% year over year in December, compared with 3% in December 2019.
San Diego home prices are forecast to increase an additional 8.2% over the next 12 months.
At the state level, Idaho, Indiana and Maine had the strongest price growth in December, up 19.1%, 16.1% and 15.2%, respectively.