The numbers: The cost of buying a home surged again in October, a closely followed index showed, and prices rose at the fastest rate in six years in a clear sign the U.S. housing market is still booming despite the pandemic.
A measure of home prices in 20 large cities rose at a 7.9% yearly pace in October, according to the S&P CoreLogic Case-Shiller price index. That’s up from 6.6% in the prior month.
A broader measure by Case-Shiller that covers the entire country also showed an 8.4% increase in home prices over the past year. That’s up sharply from 7% in the prior month.
Prices have risen at the fastest clip in more than six years, reflecting a surge in demand from people leaving cities in search of more space and the allure of the lowest mortgage rates in modern times. A short supply of homes for sale has also been a contributing factor.
On a monthly basis, the Case-Shiller 20-city index rose 1.3% in October.
What happened: Prices rose in 19 of the 20 large cities tracked by Case-Shiller. Detroit was excluded once again because not enough information could be collected. A state lockdown to try to slow the spread of the virus has led to delays in record keeping.
The biggest increases took place in Phoenix, Seattle and San Diego.
Big picture: Home sales aren’t expected to slow much, if at all, even amid a record coronavirus outbreak. Super-low rates and the growing prospects of the economy gradually returning to normal are likely to keep demand high.
For prospective buyers, that also means higher prices.
Market reaction: The Dow Jones Industrial Average
and S&P 500
were set to open higher in Tuesday trades. Stocks have climbed to a record high on optimism that coronavirus vaccines will soon lead to a stronger economic rebound.