Home prices were still gaining steam in March, as the country began shutting down in the face of the coronavirus pandemic.
On a national level, prices in March rose 4.4% annually, up from 4.2% in February, according to the S&P CoreLogic Case-Shiller index.
The 10-City Composite rose 3.4% annually, up from 3% in the previous month. The 20-City composite increased 3.9%, up from 3.5% in February. Due to reporting delays related to the pandemic, only 19 cities are included. Detroit’s price numbers were unavailable.
“March’s data witnessed the first impact of the Covid-19 pandemic on the S&P CoreLogic Case-Shiller Indices,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. “That said, housing prices continue to be remarkably stable. March results were broad-based. Prices rose in each of the 19 cities for which we have reported data, and price increases accelerated in 17 cities.”
The same cities continue to lead the gains, with Phoenix, Seattle and Charlotte seeing the highest year-over-year rising among the 19 cities. Prices in Phoenix rose 8.2% annually, followed by Seattle with a 6.9% increase and Charlotte with a 5.8% increase.
Price gains were smallest in Chicago, New York City and Dallas.
Prices are still being buoyed by a severe lack of homes for sale. There was already a shortage going into the coronavirus crisis, but then sellers began delisting their properties, and potential sellers decided to wait. Total for-sale inventory at the end of March was down 10.2% compared with March 2019, according to the National Association of Realtors.
Even now, as demand is coming back more strongly than expected, new listings are down 28% from a year earlier, according to realtor.com.
The strength in March prices came even as mortgage rates bumped sharply higher during the month. That should have given homebuyers less purchasing power. Rates began falling precipitously after that and hit a new record low late this month.
“As states are cautiously reopening business activity and people are looking at summer plans in a new light, the reality of 25 million unemployed Americans is casting looming clouds over the horizon,” said George Ratiu, senior economist at realtor.com.” For homebuyers, low availability coupled with still-rising prices are overshadowing the benefit of historically low mortgage rates.”
The March numbers should be taken with a grain of salt since they are 2 months old and are calculated using a three-month running average.
“Housing prices have not yet registered any adverse effects from the governmental suppression of economic activity in response to the COVID-19 pandemic,” Lazzara said. “As much of the U.S. economy remained shuttered in April, next month’s data may show a more noticeable impact.”