A sign reading "For Sale" will be seen outside a home on May 30, 2019 in Miami, Florida.

Joe Raedle | Getty Images

Home prices continue to break records as strong demand meets weak supply.

Nationally, home prices were 16.6% higher than in May 2020, the highest in the S&P CoreLogic Case-Shiller report for over 30 years. In April it rose by 14.8% compared to the previous year.

The 10 cities annual increase was 16.4% in May, down from 14.5% in April. The 20-city composite grew by 17% year-on-year, compared to 15% in the previous month. All 20 cities reported higher price increases in May 2021 than in April 2021.

Phoenix, San Diego, and Seattle saw the highest year-over-year gains among the 20 cities in May. Phoenix led with a 25.9% year-over-year price increase, followed by San Diego with a 24.7% increase and Seattle with a 23.4% increase. Chicago, Cleveland, and Minneapolis saw the lowest gains, although they were still in the low double digits.

"A month ago I described April performance as 'really exceptional' and this month I'm running out of superlatives," said Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. "We previously indicated that the strength of the US housing market is being driven in part by the response to the COVID pandemic as potential buyers of urban apartments move to suburban homes. The May data continue to agree with this hypothesis. "

Five cities – Charlotte, Cleveland, Dallas, Denver, and Seattle – had their highest annual gains of all time. The price gains in all 20 cities were in the upper quartile of historical performance; in 17 cities, the price gains were in the top decile.

Mortgage rates fell slightly in early May and remained in a narrow range throughout the month. Prices have been so low for so long that even minor monthly increases have done nothing to take the heat away from house prices.

The sale of new buildings and existing properties has weakened in recent months, mainly due to sky-high prices. The stock of homes for sale has finally started to grow, albeit very slowly. An increase in listings is currently the only thing that could pull back the price gains a little.

Demand is still strong due to the simple demographics of the largest generation, millennials, who are entering the home buying years. Mortgage rates have also fallen again in recent weeks.

"This dynamic confluence of housing developments is helping to keep price growth in check through August. Looking ahead to the months ahead, we expect inventories to continue growing into the fall, shifting the typical seasonal trend and keeping property activity going, "said George Ratiu, Senior Economist at Realtor.com.

source https://seapointrealtors.com/2021/07/27/home-prices-broke-records-in-may-according-to-sp-case-shiller/

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