The numbers: The cost of buying a home rose again in October, showed an index followed closely, and prices rose at the fastest pace in six years, in a clear signal that the real estate market is still booming despite a furious pandemic.
A measure of house prices in 20 major cities rose at an annual rate of 7.9% in October, according to the S&P CoreLogic Case-Shiller price index. This exceeds 6.6% from the previous month.
Meanwhile, a broader Case-Shiller measure covering the entire country showed a similar 8.4% increase in house prices over the past year. This has also increased by 7% from the previous month.
Prices have risen at the fastest pace since 2014 due to record low mortgage rates and the influx of people leaving cities to flee the coronavirus and find more space. The lack of homes for sale has also been a contributing factor.
Monthly, the Case-Shiller index of 20 cities rose 1.3% in October.
Read: New federal coronavirus staff should keep economy afloat until vaccines are spread
What happened: Prices rose in at least 19 of the 20 major cities followed by Case-Shiller. Detroit was once again excluded because not enough information could be gathered. A state blockade to try to curb the spread of the virus has caused delays in record keeping.
The largest annual increases in house prices occurred in Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).
The smallest increases occurred in New York (6%) and Chicago (6.3%) and Las Vegas (6.4%), cities that have been heavily affected by the virus or that have suffered the most from local economies.
General image: Home sales are not expected to decline much, even in the midst of a record outbreak of coronavirus. Super low rates and the growing prospects of the economy returning to normal are likely to keep demand high.
This is good news for sellers, but bad news for potential home buyers, who are unlikely to receive much of the price in 2021.
What do they say? “Data in recent months is consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices.
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
rose in trades on Tuesday. Stocks have reached the highest record of optimism that coronavirus vaccines will soon lead to a sharp economic rebound.