U.S. home prices in May increased 1.7% on an adjusted basis compared with April and were up a whopping 16.6% compared with May 2020, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.
The year-over-year increase is a 30-year record – but it is slightly skewed due to the fact that the onset of the pandemic caused a temporary slowdown in home price appreciation in May 2020.
The index’s 10-city and 20-city composites posted month-over-month increases of 1.7% and 1.8%, respectively.
Year over year, the 10-city and 20-city composites increased 16.4% and 17%, respectively.
Phoenix, San Diego, and Seattle reported 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 at 24.7% and Seattle at 23.4%.
“Housing price growth set a record for the second consecutive month in May 2021,” says Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI, in a statement. “The national composite Index marked its 12th consecutive month of accelerating prices with a 16.6 percent gain from year-ago levels, up from 14.8 percent in April. This acceleration is also reflected in the 10- and 20-City Composites which were up up 16.4 percent and 17.0 percent, respectively.
“The market’s strength continues to be broadly-based: all 20 cities rose, and all 20 gained more in the 12 months ended in May than they had gained in the 12 months ended in April,” Lazzara says. “Prices in 18 of our 20 cities now stand at all-time highs, as do the national composite and both the 10- and 20-city indices.
“A month ago, I described April’s performance as ‘truly extraordinary,’ and this month I find myself running out of superlatives,” Lazzara adds. “The 16.6 percent gain is the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data. As was the case last month, five cities – Charlotte, Cleveland, Dallas, Denver, and Seattle – joined the National Composite in recording their all-time highest 12-month gains. Price gains in all 20 cities were in the top quartile of historical performance; in 17 cities, price gains were in top decile.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes,” Lazzara continues. “May’s data continue to be consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years.
“Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.”
Photo: Tierra Mallorca