Home prices continued to climb in the U.S.
The S&P CoreLogic Case-Shiller National Home Price Index rose 6.2% in September, up from 5.9% a month earlier — the fastest annual rate increase since June 2014. The index was up 0.4% in September from a month earlier, beating analysts’ estimate of 0.3%.
Prices were lifted by low inventory of homes, at a 3.8-month supply, as well as a growing unemployment rate of 4.1% and the average rate on a 30-year mortgage of under 4%.
“Most economic indicators suggest that home prices can see further gains,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices in a press statement.
Home prices increased in all the cities tracked in the 20-city index, which posted a 6.2% year-over-year gain, up from 5.8% the previous month.
Concerns over affordability
“The price data have been showing solid gains pretty consistently in recent years while the housing activity data have been more mixed; over the past month or so, we have seen fairly widespread strength across much of the housing data,” wrote Daniel Silver of JPMorgan in a research note.
On Monday, the Commerce Department reported new single-family home sales in the U.S. rose 6.2% to a seasonally adjusted annual rate of 685,000 units in October — the highest level since October 2007. It is the third straight month of sale increases.
Meanwhile, Lawrence Yun, chief economist at the National Association of Realtors, estimates that existing-home sales will finish 2017 at a pace of 5.47 million — the best since 2006 (6.47 million), but only a modest 0.4% uptick from 2016.
“Despite considerable demand all year, pending sales have lost a step in recent months because low supply is pushing prices higher and making home buying less affordable in several parts of the country,” said Yun in a recent press statement.
Blitzer shared similar concerns about escalating home prices. “One dark cloud for housing is affordability — rising prices mean that some people will be squeezed out of the market,” he said.
Amanda Fung is an editor at Yahoo Finance.