Analysts expected US home prices to continue their re-acceleration in September (the latest monthly data from Case-Shiller), but the actual data crushed expectations, soaring 6.57% YoY (20-City Composite) versus +5.3% expected (and +5.33% in August)...
Phoenix, Seattle, San Diego reported highest year-over-year gains among 19 cities surveyed (Detroit excluded from report due to virus-related reporting constraints)
"This month’s increase may reflect a catch-up of COVID-depressed demand from earlier this year," Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices, said in a statement.
"It might also presage future strength, as COVID encourages potential buyers to move from urban apartments to suburban homes."
As we detailed earlier, three factors are driving home prices higher:
Buyers kept on benefiting from favorable market conditions with mortgage rates reaching the lowest level on record
Demand for second homes skyrocketed amid pandemic
Housing supply remained limited
As Freddie Mac's Chief Economist (@TheSamKhater) noted:
"While economic growth remains unstable, strong housing demand continues to have a domino effect on many other segments of the economy.”
And given the collapse in rates, and the lagged effect of that drop, some might argue that home prices will continue to accelerate for a while longer...
Of course, there is always the possibility of no stimulus raining on the housing market's parade as Lockdown 2.0 strikes.