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Home prices in the United States soared in August compared to the previous year. This comes as the demand for house purchases remained strong despite increasing costs.
According to the S&P CoreLogic Case-Shiller Index, prices grew 19.8 percent year on year in August. This is the first time since early 2020 that the yearly gain has not grown.
Since the onset of Covid-19, demand for houses has increased as people were searching for more space to work from home, sales of new homes rose to multi-year highs.
Labor shortages, steep lumber prices, material backlogs, and a limited supply of ready-to-build land, though, have hindered the construction of homes.
This mismatch in demand and supply of new homes compelled buyers to participate in bidding wars which led to an uncontrollable surge in prices of homes.
The Case-Shiller 10-city index increased 18.6 percent year on year in August, compared to a 19.2 percent increase in July. The 20-city index increased 19.7 percent, following a 20 percent yearly rise in July. Prices are at an all-time high across the country.
As housebuilders tighten their grip on sales, new home prices are reaching new highs, with the typical existing-home price reaching a new high of 3.3% from a year earlier to $352,800.
Price increases were aided in part by a reduction in mortgage rates in July and August. According to mortgage giant Freddie Mac, the average rate on a 30-year fixed-rate mortgage climbed to 3.09 percent on Thursday.
Phoenix had the highest price growth; its housing prices grew by 33.3 percent in August compared to the previous year. San Diego's house prices grew 26.2 percent, the second-highest gain, following Tampa's home prices growth by 25.9 percent.
Picture Credits: Vox