Latest Case-Shiller Index Highlights the Move to the Suburbs
Home prices jumped 10.4% year-over-year in December, increasing from the 9.5% posted in November.
More data are emerging that shows the movement of people from cities to suburban homes during the COVID-19 pandemic.
Home prices jumped 10.4% year-over-year in December, which is an increase from the 9.5% posted in November, according to The S&P CoreLogic Case-Shiller US National Home Price NSA Index. The 10.4% gain marks the best performance of housing prices in a calendar year since 2013.
“These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” Craig J. Lazzara, managing director and global head of Index Investment Strategy at S&P DJI. “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 10-City Composite annual increase was 9.8%, up from 8.9% in the previous month. The 20-City Composite posted a 10.1% year-over-year gain, an increase of 9.2% in the last month.
The results from the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index also support another 2020 trend—the migration to the Sunbelt. Phoenix posted a 14.4% year-over-year price increase, which gave it the highest year-over-year gains among the 19 cities (excluding Detroit) in December. Seattle and San Diego followed with 13.6% and 13.0% increases, respectively. Eighteen of the 19 cities tracked reported higher price increases in the year ending December 2020 versus the year ending November 2020.
“Phoenix’s 14.4% increase led all cities for the 19th consecutive month, with Seattle (+13.6%) and San Diego (+13.0%) close behind,” Lazzara said in prepared remarks. “Prices were strongest in the West (+10.8%) and Southwest (+10.5%), but gains were impressive in every region.”
Overall, the US National Index posted a 0.9% month-over-month increase, while the 10-City and 20-City Composites both posted gains of 0.9% and 0.8%, respectively, in December. The US National Index posted a month-over-month increase of 1.3%, while the 10-City and 20-City Composites both posted gains of 1.2% and 1.3%, respectively, after seasonal adjustments.
Even builders in areas hit hard by the pandemic, like the Bay Area, are expecting strong demand for for-sale product and strong pricing appreciation.
“The Bay Area housing market outlook is very positive,” Jeff Frankel, president of Tri Pointe Homes’ Bay Area division, told GlobeSt.com in an earlier interview. “In 2021, we expect continued strong sales and price appreciation in most markets, which will result in low inventories. The year will not be without its challenges. Builders must manage COVID-19-related issues, including supply chain adjustments, labor shortages and municipality delays. For buyers, the main challenge, again, will be lack of supply.”