Housing prices have continued to surge during the pandemic at a rapid pace, with one index showing a record jump in recent months.
The Federal Housing Finance Agency’s quarterly housing price index rose 3.1% in the third quarter over Q2 2020, the largest gain since that data has been collected starting in 1991, according to Lynn Fisher, deputy director of FHFA’s division of research and statistics. The index also showed a 7.8% increase in prices over the third quarter of 2019.
Meanwhile, the monthly S&P Corelogic Case-Shiller Index analysis showed a 7% gain in average home prices in all nine U.S. census divisions in September, compared with a 5.8% rise in August.
“Record low mortgage rates, the geographic flexibility of work-from-home, and demand that far exceeds the limited supply of homes available for sale continue to push home prices higher,” said Greg McBride, Bankrate’s chief financial analyst.
Since the start of the pandemic, real estate has remained a rare bright spot in an otherwise dark economic picture.
Lockdowns and working from home trends coupled with historically low mortgage interest rates prompted many people to move, especially out of cities and into suburbs in search of more space.
“Housing experienced a v-shaped recovery that helped boost the overall US economic recovery during the summer and early fall,” Fisher said in a video released by FHFA. “While a great deal of uncertainty remains, we expect housing markets to remain tight, putting upward pressure on home prices in the near term.”
It’s likely that mortgage rates will begin climbing in the coming months, though they’ll still remain low compared to historical trends. Even so, housing stock is expected to remain limited, so home prices are unlikely to fall off significantly.
The trend doesn’t just benefit homeowners looking to sell, either. Higher home prices means more equity for all homeowners. If you own your house and want to stay put, now is a great time to consider tapping that equity for some improvement projects or other investments.