Housing prices continue to be remarkably stable across most of the U.S., according to a leading tracker of residential real estate prices.
The latest S&P CoreLogic Case-Shiller Index for March – when the first impacts of the pandemic were emerging — showed prices were gaining strength, rising 4.4% annually (up from 4.2% in February).
In commenting about the price stability reflected in March’s numbers, Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, noted housing prices had not yet registered any adverse effects from the governmental suppression of economic activity in response to the COVID-19 pandemic. “As much of the U.S. economy remained shuttered in April, next month’s data may show a more noticeable impact,” he added.
March’s year-over-year gains were ahead of February’s, continuing a trend of gently accelerating home prices that began last autumn,” Lazzara suggested.
Case Shiller’s data showed prices rose in all 19 large cities in the index, which typically includes 20 cities. Numbers for the Detroit metro area were unavailable.
In the tri-county area of King, Pierce and Snohomish counties, prices jumped 6.9%, surpassed only by Phoenix at 8.2%. Chicago, New York City and Dallas registered the smallest price gains.
Industry-watchers believe home prices are still being buoyed by sparse inventory. The shortage going into the coronavirus crisis was exacerbated when sellers began delisting their properties, and other potential sellers stayed on the sidelines, opting to take a wait-and-see approach. Figures from the National Association of Realtors® (NAR) show a 10.2% drop in for-sale inventory at the end of March compared to a year ago.
In King County, inventory in March was down more than 34% from twelve months ago. Snohomish County’s active listings were off more than 26% and Pierce County supply dwindled more than 18%, according to data from Northwest Multiple Listing Service.
“While March was still early days, it’s looking likely that the initial impact will be felt mostly on plunging sales and listings volumes, not prices,” said Robert Kavcic, senior economist at BMO Capital Markets.
A report by CNBC noted the strength in prices during March came “even as mortgage rates bumped sharply higher during the month.” That should have given homebuyers less purchasing power. Rates subsequently fell, hitting a new record low in late May.
MarketWatch, a financial information website, singled out Seattle for its 6.9% price appreciation during March, “despite the fact that it was one of the first hot spots for the coronavirus outbreak in the U.S.”
MarketWatch also noted as the country rebounds from the pandemic and buyers return to the market, a limited inventory of homes for sale “could fuel bidding wars and push prices higher.”