Case Shiller Home Prices: Further Acceleration

November 24, 2020
Bottom Line: As housing activity continued well into the Fall, prices accelerated in many markets. Home prices nationwide rose for the second month in a row in September after several months of flat prices in the immediate wake of the pandemic. While some urban areas remain weak, the increased demand for less dense, single-family housing has led to overall higher prices. It is important to note that these data measure the "metropolitan statistical area" which is typically composed of a large geographic region around a city, typically including all of its major suburbs. September saw further gains for the hot markets like San Diego, Phoenix, and Seattle, but also solid gains in markets like New York and Chicago that had been lagging. Overall, expect more dispersion and volatility in prices across regions and within regions as the pandemic likely marked a structural shift in demand towards single-family, suburban housing after a multi-decade trend towards re-urbanization and multi-family housing. On the net at the national level, the demand shift appears to be accelerating the price of gains in housing, likely pushing it significantly above the pre-pandemic trend of 2-3% annualized gains for at least a few more quarters. Case Shiller 20-City Home Price Index ROSE by 1.27% (seasonally adjusted) in September to 231.2, compared with market expectations for an increase of 0.7%. Home prices are 6.6% ABOVE their year-ago level. On a non-seasonally adjusted basis, the home price index ROSE by 1.2% on the month. Housing prices rose in 19 of the 20 metro areas in September (on a seasonally adjusted basis) and in 20 of 20 metro areas on a year-over-year basis. Detriot had the smallest year-over-year increase at 2.0% while Phoenix had the largest year-over-year increase at 12.0%.