Radian HPI Shows Continued Annualized Growth Rate in Home Prices Nationally

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According to data from the latest Radian Home Price Index (HPI), U.S. home prices increased at an annualized rate of 11.5 percent in May 2021 from April 2021 and 9.9 percent year over year.

The Radian HPI also rose 9.9 percent year-over-year (May 2020 to May 2021), which was slightly higher than the year-over-year increase of 9.3 percent recorded last month. The Radian HPI is calculated based on the estimated values of more than 70 million unique addresses each month, covering all single-family property types and geographies.

Nationally, the Radian HPI estimated the median price for single-family and condominium homes rose to $280,002. Across the U.S., home prices nationally rose 11.5 percent over the last three months, slightly higher than the 10.5 percent reported for the three months from February through April.

In May, the percentage of homes sold under $250,000 stood at 30.5 percent of all sales. This is the lowest percentage recorded since before the Great Recession began. And in contrast, the percentage of homes sold over $500,000 represented 27.2 percent of all sales, which is more than 3.5 times larger than the 7.5 percent share recorded just a decade earlier.

“Unlike repeat sales or median price based indices, the Radian Home Price Index generates an estimated value on nearly all homes that make up the U.S. housing stock, every month, providing us a broader and more realistic view of home price changes,” noted.

“While home prices have been growing at higher than typical levels, recent reports of annual home prices being higher by 20 percent or more nationally do not represent the entire housing market, but rather the small segment of properties actually sold,” says Steve Gaenzler, SVP of data and analytics.

“This is an incomplete measure of understanding household wealth and equity,” he remarks. “These measures only look at the median price of homes sold, not the estimated price change on all homes, including the majority of homes that are not currently on the market. As such, the changing mix of sales will influence the rates of increase reported in these other measures.”

Radian notes that all U.S. regions appreciated at a faster rate in May. The weakest regions were the Southwest, which was largely unchanged from the prior month, and the MidAtlantic, while the Midwest and West regions were the best performing month-over-month.

All six regions recorded actual 12-month price appreciation rates between 8.5 and 11.6 percent, signaling a robust market existing in all parts of the U.S. Regional economic indicators are also supportive of these far-reaching gains in home prices.

From 1980 until 2010, the average annual number of new privately owned housing units authorized with building permits averaged more than one million per year. However, over the subsequent decade (2010-2020), the U.S. only averaged a little over 650,000 permits for new homes per year, creating a substantial shortage of newly constructed homes.

While all regions showed increasing appreciation rates, some of the 20 largest metro areas actually recorded lower rates of appreciation from the prior month. In fact, while all of the 20 largest had higher prices in May, only eight of them grew faster than the month prior, according to Radian.

One of the best performers last month was San Francisco. Over the past year, the Bay Area has not been a leading metro for price appreciation, but this month it recorded a double-digit annualized one-month growth rate for only the third time since the beginning of 2020.

Three metro areas – Riverside, Calif.; Phoenix; and Tampa, Fla. – all showed substantial slowdowns in appreciation rates.

Photo by Rachel Elaine, licensed under CC BY 2.0

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