US home prices surge most since 2006 with tight inventory

With inventory tight, especially in suburban markets, prices have jumped to record highs.
With inventory tight, especially in suburban markets, prices have jumped to record highs.PHOTO: AFP

WASHINGTON (BLOOMBERG) - US home prices soared the most in 15 years, with low mortgage rates and a scant inventory of properties to buy fueling a tight housing market.

Nationally, the S&P CoreLogic Case-Shiller index of property values climbed 12 per cent in February from a year earlier, the biggest jump since 2006. That followed an 11.2 per cent gain in January.

Home prices in 20 US cities jumped 11.9 per cent, meanwhile, beating the median estimate of 11.8 per cent in a Bloomberg survey of economists.

Historically low mortgage rates have been at the centre of the pandemic housing rally, increasing buying power as Americans look to upgrade their properties. The average for a 30-year loan dropped to 2.97 per cent in the most recent data, moving closer to the record low 2.65 per cent set in January.

With inventory tight, especially in suburban markets, prices have jumped to record highs.

"These data remain consistent with the hypothesis that Covid has encouraged potential buyers to move from urban apartments to suburban homes," according to the report.

Phoenix reported the biggest year-over-year gains among the 20 cities in February with a 17.4 per cent increase. That was followed by San Diego at 17 per cent and Seattle with a 15.4 per cent increase.

Nineteen of the 20 cities reported higher price increases in the year ending February 2021 versus the year ending January 2021.