US home prices jumped the most in 7 years in December as the housing-market boom charged into the new year, Case-Shiller says
- The S&P Case-Shiller US home-price index rose to a 10.4% annualized increase in December, up from 9.5%.
- The reading marks the strongest pace of price growth in seven years, according to a press release.
- The data suggests the
US housing marketended 2020 strong amid low inventory and record-low mortgage rates.
The S&P CoreLogic Case-Shiller US National
"These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes," Craig Lazzara, managing director and global head of index investment strategy at S&P DJI, said in a statement. "This may indicate a secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway."The
Though the Tuesday release shows the housing market's rally set to continue into 2021, momentum has wavered in recent weeks. After the 30-year fixed mortgage rate sank below 3% for the first ever in mid-2020 and stayed there for months, it turned higher in mid-January, signaling the buying frenzy could soon cool.This shift was one of several January and February datapoints indicating investors are growing wary of inflation leaping higher as the economy recovers. Rising inflation would likely correspond with rising mortgage rates and, in turn, slow home-price growth. Still, the US housing market will likely thrive through 2021 as more forthcoming stimulus bolsters homebuying activity, Fitch analysts led by Suzanne Mistretta said in a February 16 note. The firm said it expects prices and mortgage volume to continue growing in 2021 due to consistently low borrowing costs and lasting supply constraints. Demand is likely to outpace supply until the effects of the coronavirus pandemic fade, the analysts said. In other words, there won't be enough homes to go around for a while yet.
Market health could waver should job losses creep into previously unaffected industries and hit higher-income workers, the team added.
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