U.S. home prices surged in April at fastest pace in over 30 years

U.S. single-family home prices saw an annual gain of 14.6% in April, the most in over 30 years, S&P CoreLogic Case-Shiller National Home Price Index data revealed on Tuesday.

In March, the survey reported the average home price increased by 13.3%. April marked the highest annual growth rate since the index began in 1987.

The S&P CoreLogic Case-Shiller National Home Price Index measures the average home prices in key metropolitan areas across the nation.

The COVID-19 induced pandemic has led to low mortgage interest rates, which have stimulated high demand, and a continued shortage of homes for sale has pumped up the home prices in recent months.

The home-price surge is widespread around the U.S., where many homes are getting several offers and selling above the asking price, ultimately affecting buyers and sellers.

On a year-over-year basis, 10 key metropolitan cities’ price index was up 14.4% in April, from 12.9% the previous month. Likewise, the 20-city composite rose 14.9%, up from 13.4% in March.

Phoenix, San Diego, and Seattle reported the highest year-over-year gains among the 20 cities in April. The survey showed that the price index in these three cities went up over 20% from the year before.

Five cities, including Charlotte, Cleveland, Dallas, Denver, and Seattle, saw their largest annual gains.

“April’s performance was truly extraordinary. The 14.6% gain in the National Composite is literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data,” Craig Lazzara, managing director and global head of index investment strategy at S&P DJI, told CNBC.

Earlier this month, the National Association of Realtors said the median existing-home sales price in May rose to $350,000 for the first time, about 24% higher than a year earlier.

The data from May showed the demand for homes after the pandemic recovery is continuously outstripping the supply. The inventory of homes for sale rose slightly in May compared to April, but still 21% lower against the year earlier, according to the National Association of Realtors.

“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. April’s data continue to be consistent with this hypothesis,” added Lazzara.

Selma Hepp, the deputy chief economist at CoreLogic, told CNBC that although home prices are rising, the risk of price declines had fallen far below pre-pandemic and summer 2006 levels when homes prices last peaked.

Picture Credit: Al Jazeera