After cooling for much of last year, home price gains are accelerating again.
Nationally, prices increased 3.5% annually in November, up from 3.2% in October, according to the S&P CoreLogic Case-Shiller National Home Price Index.
The 10-City Composite increased 2.0% annually, up from 1.7% in the previous month. The 20-City Composite rose 2.6% annually, up from 2.2% in October.
Prices are hottest in Phoenix, Charlotte, North Carolina, and Tampa, Florida. Phoenix home prices were up 5.9% year over year in November. In Charlotte, they rose 5.2%, and in Tampa home prices increased 5.0%. Fifteen of the 20 cities reported larger price increases in the year ended in November 2019 compared with the year ended in October 2019.
"With the month's 3.5% increase in the national composite index, home prices are currently 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak," said Craig J. Lazzara, managing director and global head of Index Investment Strategy at S&P Dow Jones Indices. "November's results were broad-based, with gains in every city in our 20-city composite."
Lower mortgage rates may be fueling home prices, as buyers gain purchasing power when rates fall. Mortgage rates were about a full percentage point lower in November 2019 than they were in November 2018.
A more powerful driver of prices, though, is the severe shortage of homes for sale. Inventories have dropped to near record lows, especially at the entry level of the market. Strong demand and tight supply only push prices higher. Inventories had been rising at the beginning of last year, causing prices to cool.
"It is, of course, still too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend," added Lazzara.