U.S. home prices rose sharply in August from a year ago, a trend that is thwarting many would-be buyers and potentially slowing sales.
The Standard & Poor’s CoreLogic Case-Shiller national home price index increased 6.1% in August from a year earlier. That’s higher than the 5.9% annual gain in July. In 9 of the 20 cities tracked by the index, yearly price gains in August were faster than in July.
Fewer Americans are selling their homes, and builders aren’t putting up enough new houses to meet burgeoning demand. That has forced home buyers into bidding wars, lifting prices. Mortgage rates remain at historically low levels, making it easier to afford higher costs. That has resulted in rising prices even as sales have slipped this year.
“Home price increases appear to be unstoppable,” says David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. Housing costs are climbing much faster than overall inflation or wages.
Sales of existing homes ticked up in September after falling for three months. Still, sales have fallen 1.5% from a year ago, according to the National Assn. of Realtors, the first year-over-year decline since July 2016.
Yet the declining sales figures don’t reflect a lack of demand. A typical home in September was snapped up just 34 days after listing, down from 39 days a year ago. Surveys show most renters consider it a good time to buy a home, and increasing numbers of millennials are employed and entering prime home-buying years.
Those buyers simply aren’t finding many options, particularly among less-expensive homes. The number of homes for sale in September was 6.4% lower than a year ago. There were just 1.9 million existing homes for sale that month, the fewest in any September since the Realtors began tracking the figure in 2001.
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The August figures are the latest available.