U.S. home prices climbed a robust 6.2% year-over-year, amid strong demand from would-be buyers and a shrinking supply of properties for sale.
Standard & Poor's said Tuesday that for October, its S&P CoreLogic Case-Shiller national home price index stood a solid 6% above its previous 2006 peak. Prices are rising at more than double the pace of wage growth, creating some affordability pressures that have been offset by relatively low mortgage rates. Metro areas with booming job markets and the steepest home price gains could lead more residents to become renters.
“Since home prices are rising faster than wages, salaries and inflation, some areas could see potential home buyers compelled to look at renting,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.
The strongest annual gains occurred in Seattle, where prices shot up 12.7% since October 2016. In Las Vegas, prices are up 10.2%, while San Diego notched growth of 8.1%. Los Angeles was up 6.5%.
Of the 20 metro areas tracked by the index, Washington reported the smallest price gain: 3.1%.
As the economy has recovered from the 2008 financial crisis, demand from would-be buyers has steadily improved. The 17-year-low unemployment rate of 4.1% has left more Americans confident enough to put bids on homes. Sales of existing homes in November reached their strongest pace since December 2006, according to the National Assn. of Realtors.
But the sales growth has not compelled more people to list their homes for sale. The number of properties on the market has tumbled nearly 10% in the past 12 months.
Mortgage giant Freddie Mac said last week that the rate on 30-year fixed-rate mortgages averaged 3.94%, down from 4.30% a year earlier.