If you’re thinking about purchasing a home this year, you may be surprised to discover that home prices are continuing to surge despite the economic upheaval caused by the COVID-19 pandemic. Although prices have been climbing, home sales haven’t slowed much since the onset of the pandemic. Here, I share more about the trajectory of home prices to help you determine if this is the right time for you to become a homeowner.
Even as the pandemic picked up speed in the fall, U.S. home prices climbed at the fastest rate in six years. For homes in 20 large cities, the growth rate was 7.9% according to the S&P CoreLogic Case-Shiller price index. This is an increase from 6.6% the previous month. A broader measurement of homes across the country shows an 8.4% increase in prices over the last year, up from 7% the previous month.
Inventory continues to be limited in many areas of the country, which is contributing to the rising prices. In addition to a tight selection of available homes and greater competition, the coronavirus pandemic is prompting more people to leave apartment homes in cities in pursuit of more space. Interest rates are also at historic lows, so despite high prices, many individuals are motivated to buy.
Although home prices are generally on the rise, some cities have seen much steeper increases than average. The sharpest increases have occurred in Phoenix, Arizona (12.7%), Seattle, Washington (11.7%), and San Diego, California (11.6%). On the contrary, areas that saw the smallest rates of increase include New York, New York (6%), Chicago, Illinois (6.3%), and Las Vegas (6.4%). It’s likely that these areas have experienced slower growth because they’ve been hardest hit by the virus and economic fallout from the spread.
Regardless of where you’re thinking about buying, it’s important to be aware of the pricing trends in your area. Although home prices are on the rise, now may be an excellent time to buy due to the historically low interest rates.
By Michaela Phillips. Michaela is the Vice President of Mortgage Lending at Guaranteed Rate, Inc. Contact Michaela at 303.443.6292, e-mail [email protected] or visit michaelaphillips.com. NMLS: 312874.