U.S. home prices grew at a record annual pace in May, rising almost 17 percent from 2020 amid tight supply and rabid demand, according to data released Tuesday.
The S&P CoreLogic Case-Shiller price index for U.S. homes rose 16.6 percent in the 12 months leading into May, surpassing the record 14.8 percent annual rise seen in April. All 20 cities tracked by the index saw higher annual price growth in May than the previous month, and prices reached all-time highs in 18 of those cities.
“A month ago, I described April’s performance as ‘truly extraordinary,’ and this month I find myself running out of superlatives,” said Craig J. Lazzara, a managing director at S&P Dow Jones Indices.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes. May’s data continue to be consistent with this hypothesis,” Lazzara said.
U.S. house prices have skyrocketed since spring 2020 thanks to a combination of historically low borrowing costs, fiscal stimulus, a massive shortfall of housing and a rush of demand triggered by the pandemic. While sales have begun to fall off as buyers reach the limits of their budgets, prices have remained unattainably high for many potential first-time owners.
“Homebuying affordability has deteriorated sharply, pricing some buyers out of the market. Home prices will have to adjust at least modestly as a result. We expect some moderation in home price inflation in the second half of this year but still look for annual price growth to be in double digits,” wrote Nancy Vanden Houten of Oxford Economics.