Home Prices Surged in April, for Highest Price Spike in More than 30 Years Article originally posted on NBC News on July 2, 2021 Home prices in April saw an annual gain of 14.6 percent, up from a 13.3 percent increase in March, according to the S&P CoreLogic Case-Shiller National Home Price Index, released on Tuesday. Among larger cities covered by the index, the 10-city composite was up 14.4 percent year over year, from 12.9 percent the previous month. Phoenix, San Diego and Seattle reported the highest year-over-year gains, up more than 20 percent from the year before. “April’s performance was truly extraordinary. The 14.6 percent gain in the National Composite is literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. Not only did home prices rise in all 20 cities, but the price gains accelerated in all as well and were in the top quartile of performance historically. Five cities — Charlotte, North Carolina; Cleveland, Dallas, Denver and Seattle — saw their largest annual gains ever. “We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes. April’s data continue to be consistent with this hypothesis,” added Lazzara. Price gains have been expanding for the last 11 months, as buyer demand continues to outstrip supply. The inventory of homes for sale rose slightly in May compared with April, but was still 21 percent lower than May 2020, according to the National Association of Realtors. Home sales have been falling for the past few months, due both to low supply, especially at the entry level of the market, and very high prices. Single-family housing starts have also slipped, as homebuilders try to keep up with a heavy backlog of demand amid high prices for land, labor and materials. There has been growing talk of a price bubble in the housing market, but the fundamentals of today’s market say otherwise. “Although home price growth is reaching new highs, the risk of price declines has fallen far below pre-pandemic and summer 2006 levels, when homes prices last peaked. This is likely because favorable mortgage rates and income growth continue to keep the ratio of mortgage payments to monthly household income much lower today,” said Selma Hepp, deputy chief economist at CoreLogic. “Consequently, elevated buyer demand, coupled with lacking for-sale inventories, will continue putting pressure on prices — which are likely to remain at double-digit increases through the third quarter of 2020,” she added. There is, however, a growing divide between the haves and have-nots in housing. Sales activity is gaining dramatically on the higher end of the market but falling on the low end as more buyers are priced out. Some blame the Federal Reserve for keeping mortgage rates artificially low, through its bond-buying program. Record low rates last year helped juice the homebuying boom, but those rates, now slightly higher, cannot offset the huge price gains. “So much for the Fed’s all-inclusive monetary policy where lower income people now can’t afford housing,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.