US Q3 home prices gain most on record as low rates drive demand

Washington

US home prices surged the most on record in the third quarter, according to a report on Tuesday from the Federal Housing Finance Agency.

With record-low mortgage rates fuelling demand for housing, prices jumped 3.1 per cent compared to the prior quarter. That was the biggest gain in records dating to 1991, according to FHFA.

Compared to 2019, prices were up 7.8 per cent in the three months through September, the biggest jump since 2006.

The housing market has been booming during the pandemic in the US, with cheaper borrowing costs and the desire for more space to spread out fuelling a surge in purchases.

Prices for homes have soared across the US despite the economic uncertainty from Covid-19. The gains have been driven in part by low inventory of houses for sale.

In a separate report on Tuesday, the S&P CoreLogic Case-Shiller index of values in 20 of the largest metropolitan areas climbed 6.6 per cent from a year earlier. That beat expectations and was the biggest gain since 2014.

The pandemic temporarily froze the real estate market in March, but housing has rebounded to bolster the broader economy. While sales would typically slow down this time of year, demand has remained strong as buyers look to take advantage of low rates.

"The delayed spring homebuying season fuelled sales well into October and past the time when they would normally begin to slow down," said George Ratiu, an economist at Realtor.com "Heading into winter, demand continues to be strong." BLOOMBERG