There have been numerous recent reports regarding the strident performance seen in home prices and sales in the urban markets most impacted by the COVID-19 pandemic.
The closing of the third quarter brings a good opportunity to take a look at home price performance across a wider cross-section of the U.S. housing market. Based on data from its Daily Home Price Flash, Black Knight’s Collateral Analytics analyzed single-family home (SFH) prices nationwide as well as in some major markets, and found some interesting takeaways about current conditions.
The annual percent change in the overall median existing SFH price has skyrocketed in the past several months, with recent numbers at three to five times higher than rates seen in the past several years.
We see three reasons for the spike in these rates:
- Low inventory – Nationwide, SFH inventory has been trending downward for the past several years, and this has been compounded by the COVID-19 pandemic driving more and more Americans away from dense areas.
- Appetite for more space – In addition to driving down inventory across urban centers on the whole, COVID-19 has also upended the way that most people live, with work and school increasingly happening remotely. This has created a higher demand for larger homes with spare room for office space, thus driving up prices in an already sparse market.
- Low rates – Record unemployment numbers have led to historically low mortgage rates, which are further fueling consistent competitive demand, and helping cause prices to surge.
Below, we see a long-term view of the annual percent change in the overall median SFH price across the U.S. market. As seen, this figure has shot up since July, and is now more than a 14 percent higher from a year ago.
We also wanted to view the data from several major counties throughout the past few years. As seen in the below figure, the overall high appreciation rates have been broadly based. This is quite remarkable considering the current overall economic situation, and is very much a function of the extremely low inventory of homes for sale in most U.S. real estate markets, combined with increased demand for additional space for remote living.
We will continue to monitor these figures as the market reacts to the unprecedented dynamics that COVID-19 has brought forth.
Black Knight’s Collateral Analytics will provide bimonthly snapshots of home sales and price information for major U.S. markets via this blog.