The pace of home price growth sped up in December, marking a full eight years of price increases in American homes for sale.
Average home prices in major metropolitan areas rose 3.8% in the year ended in December, accelerating up from 3.5% the prior month and 3.3% in October, according to the S&P CoreLogic Case-Shiller National Home Price Index. The 20-city index posted a 2.9% gain annually, up from 2.6% the month prior. All 20 cities saw price increases.
Economists surveyed by The Wall Street Journal had expected the 20-city index to gain 2.9% for December.
The pace of home price growth has been growing for several months now after a slow start to 2019.
“The U.S. housing market continued its trend of stable growth in December,” said Craig Lazzara, a managing director at S&P Dow Jones Indices.
U.S. cities measured by the index with the largest price growth included Phoenix, Tampa, Fla., and Charlotte, N.C., where prices have increased by more than 5% annually. Prices in the largest U.S. cities are growing slower than in the country at large, the report found, with sales prices increasing by only 2.4% in S&P’s 10-city composite index.
The housing market has received a boost over the last year in the form of historically low mortgage interest rates, coinciding with an increase in home sales as measured annually. That, combined with historically low inventory of homes for sale, is contributing to the rise in prices and has made the homebuying process more competitive in many parts of the country.
“Having seven or eight bids on a house is not excessive now,” said Lori Adams, a Realtor at Century 21 Sweyer & Associates in Buffalo, N.Y. “Five years ago we didn’t see that.”
A separate measure of home price growth by the Federal Housing Finance Agency also found an increase in home prices at the end of 2019. Prices rose 5.1% annually in the fourth quarter of last year, with prices rising in every U.S. state, according to FHFA. The greatest annual price gain was in Boise, Idaho, where prices increased 12.7%.