In October, home prices across the country surged 6.2 percent year-over-year, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, marking a slight increase from the 6.1 percent annual gain reported in September.
Seattle, Las Vegas and San Diego continued to lead the pack with home price increases ranging from 8.1 to 12.7 percent. The national, 10-City and 20-City Composites all boasted 0.7 percent seasonally adjusted month-over-month gains, with all cities reporting home price growth.
Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, David M. Blitzer, says home price growth continues to be fueled by low inventory, which is at a 3.4-month supply, and is currently outpacing wage growth.
“Nationally, home prices are up 6.2 percent in the 12 months to October, three times the rate of inflation,” said Blitzer in the report. “Sales of existing homes dropped 6.1 percent from March through September; they have since rebounded 8.4 percent in November.”
Blitzer also noted home price growth is reflective of positive economic factors, such as low-interest rates and low unemployment. But he expects these factors to change in the coming year, due to predictions about the Fed raising rates.
“The Fed is widely expected to raise the Fed funds rate three more times to reach 2 percent by the end of the New Year,” he noted. “Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential homebuyers compelled to look at renting. Data published by the Urban Institute suggests that in some West coast cities with rapidly rising home prices, renting is more attractive than buying.”
The S&P/Case-Shiller U.S. National Home Price Index is a composite of single-family home price indices that is calculated every month; the indices for the nine U.S. Census divisions are calculated using estimates of the aggregate value of single-family housing stock for the time period in question.
The nine divisions are:
- New England
- Middle Atlantic
- East North Central
- West North Central
- South Atlantic
- East South Central
- West South Central
- Mountain
- Pacific
CoreLogic serves as the calculation agent for the S&P/Case-Shiller U.S. National Home Price Index.