An unexpected surge: Home prices rise 5.5% in September | Construction Dive
Dive Brief:
- Home prices across the U.S. rose 5.5%, more than the expected 5.2%, between September 2014 and September 2015, according to the S&P/Case-Shiller 20-City Composite Index.
- San Francisco, Denver, and Portland, OR, saw the greatest year-over-year gains again this month — as they did in last month’s report — but San Francisco was the standout, up 11.2% year-over-year. The National Home Price Index, which measures all nine U.S. census divisions, rose 4.9% in September from the same month in 2015.
- The general consensus, according to the report, is that the Federal Reserve will raise interest rates in December. But David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said 30-year mortgage rates likely still won’t exceed 4%.
Dive Insight:
Blitzer said this month’s report indicates continuing strength in housing as home prices rise at more than twice the rate of inflation. “The general economy appeared to slow slightly earlier in the fall, but is now showing renewed strength,” he said.
Svenja Gudell, chief economist at Zillow, said the threat of rising prices could negatively affect housing affordability, as homebuyers today are already finding it more difficult to save up for down payments.
“Rising home values and rents alike can make saving a suitable down payment very difficult, and continued shortages in for-sale homes means even qualified buyers with decent savings are often left out in the cold,” she said.
Recent analysis of the real estate market has revealed that young people, who are also burdened with student debt, are having the significant difficulties coming up with down payments because rents are rising, as well as home prices, making it increasingly difficult to save money. In fact, the first-time homebuyer share of the market is at a 30-year low.