The S&P/Case-Shiller U.S. National Home Price NSA Index, reported a 5.8% annual gain in March, up from 5.7% last month and setting a 33-month high. The index’s closely watched 20-city index climbed 5.9% in March from the same period a year ago, as tighter housing inventory stoked soaring prices.
Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In March, Seattle led the way with a 12.3 % year-over-year price increase, followed by Portland with 9.2%, and Dallas with an 8.6% surge. Ten cities reported higher price gains in the year ending March 2017 than in the year ending February 2017, according to Case-Shiller.
Eighteen of the 20 cities reported increases in March before seasonal adjustment; after seasonal adjustment, 17 cities saw prices rise.
“While there is some regional variation, prices are rising across the U.S. Half of the 20 cities tracked by the S&P Corelogic Case-Shiller indices rose more than 6% from March 2016 to March 2017,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. He noted that the smallest gain of 4.1% in New York was twice the rate of inflation.
Unusually low inventory has pushed home prices higher and people are staying in their homes longer rather than selling and trading up.
Housing inventory plummeted in the first quarter of 2017, but that drop is even more pronounced in the starter home and trade-up markets, according to a report from Trulia. The online residential real estate site said starter homes had the biggest drop in inventory in the first quarter.
Comparing the national housing stock in the 100 largest metros from the first quarter of 2012 to the first quarter of 2017, the number of starter and trade-up homes fell 8.7% and 7.9%, respectively. By contrast, inventory of premium homes fell only 1.7% from 2012 levels.
Buying a home is also taking a bigger bite out of a homebuyer’s paycheck. Starter and trade-up home buyers need to spend 2.9% and 1.6%, respectively, more of their income than last year to buy a home, according to Trulia.
It took just 34 days to sell a home,, according to themortgagereports.com, the fastest rate in five years.
Also, 30-year mortgage rates, though remaining at low levels, are now at about 4%, and if they rise further, this could deter more people from buying and keep pressure on inventories and prices. The 30-year fixed rate was 3.95% for the week ending May 25, according to Freddie Mac.