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US home prices ease in sign pandemic rally may cool
[WASHINGTON] The pandemic housing market rally, a bright spot for the US economy, may already have peaked as the growth in home prices starts to slow.
The asking price for a typical single-family home jumped 13.8 per cent from a year earlier, according to an index from Haus, an investment platform for homebuyers. That was down from a peak of 16.5 per cent growth in late July.
"The rate of growth was unsustainable," said Ralph McLaughlin, chief economist at Haus.
The Covid-19 pandemic, after causing buyers to pause when lockdowns began in March, fuelled a buying frenzy in 2020. Borrowing costs fell to record lows and Americans decided to upgrade to bigger homes in the suburbs or follow their dreams to mountain towns out West. But in the new year, real estate analysts are watching for a slowdown.
Rates for 30-year loans, below 3 per cent since July, are unlikely to fall significantly from here. And with homes to buy in short supply, buyers will inevitably be squeezed out of the market.
The Common Haus Price Index, designed to be a leading indicator, uses asking prices rather than closed sales to measure the value of a typical US home. It includes eight weeks of data, though it weighs the most recent week most heavily.
Allentown, Pennsylvania, showed a 25 per cent jump last week, followed by Austin, Texas, with a 21 per cent increase.
The New York suburbs on Long Island have been red hot, with a rush of buyers trying to escape the city. But there are signs that market is cooling off. Asking prices fell 2.4 per cent last week, the biggest annual drop among the 100 largest metropolitan areas, according to Haus. They fell 1 per cent in Kenosha County, Wisconsin, the only other decline.
Long Island broker Albert Pantino noticed a pullback around the holidays in November that continued as Covid-19 cases surged. But the market now seems to be heating up again, he said.
"The industry was rocking and rolling until Thanksgiving and it went sideways between Thanksgiving and the first of the year," Mr Pantino said. "But as long as you have low interest rates and low inventory, that's your chemistry for a hot sellers' market. That has not changed."