Supply austerity: U.S. housing prices see fastest growth in 17 years | Business and Economic News
Driven by the hot real estate markets in Phoenix, San Diego, and Seattle, US house prices in May recorded the largest increase since 2004.
Due to the surge in housing demand and short supply, the US housing price increase in May exceeded the highest level in 17 years.
The Standard & Poor’s CoreLogic Case-Shiller 20-city house price index released on Tuesday surged 17% in May from the same period last year on the basis of a 15% rise in April.
The increase in May was the largest increase since August 2004.
The most popular markets are Phoenix-prices soared 25.9%, San Diego-24.7%, Seattle-23.4%. In May, year-on-year growth in all 20 cities was higher than in April.
The US real estate market has been very hot. Many Americans, tired of being locked up at home during the pandemic, have replaced urban apartments and small houses with large suburban houses. The Fed’s loose monetary policy has also kept mortgage interest rates near historical lows, thereby boosting housing demand.
The supply of homes for sale is limited, partly because many Americans are unwilling to put their properties on the market and allow potential buyers to buy through their homes.
But rising prices have driven many potential buyers out of the market. The US Department of Commerce reported on Monday that new home sales in June fell for the third consecutive month, falling to the lowest level in more than a year. Last week, the National Association of Realtors reported that sales of homes occupied before June rose, ending a four-month continuous decline.
Matthew Speakman, an economist at the real estate company Zillow, said: “Price pressures are still very strong, and it seems that they are going to stay that way in the coming months.” “Indeed, the sharp increase in prices seems to be true. It has discouraged some home buyers, especially those hoping to enter the market for the first time, and caused potential home buyers to feel tired. But the overall demand for homes is still very strong.”