S&P CoreLogic Case-Shiller 20 City Home Price Index January 2021 Year-Over-Year Growth Continues

CoreLogic believes home demand will remain firm moving forward (January 2021 Data). Per Dr. Frank Nothaft, chief economist at CoreLogic and Frank Martell, president and CEO of CoreLogic stated:

Record-low mortgage rates were a significant driving force behind last year's rebound in housing market activity. However, heavy competition for the few houses on the market drove home prices to historic highs, and mortgage rates are no longer enough to sway the affordability challenges for consumers. While new construction may help balance home prices towards the end of 2021, we may expect to see demand slow in the medium-term.

At the start of the pandemic, many braced for a Great Recession-era collapse of the housing market. However, market conditions leading into the crisis — namely low home supply, desire for more space and millennial demand — amplified the rapid acceleration of home prices

From the National Association of Realtors (February 2021 data):

Despite the drop in home sales for February - which I would attribute to historically-low inventory - the market is still outperforming pre-pandemic levels.

There may be a possible slowdown in growth in the coming months as higher prices and rising mortgage rates will cut into home affordability.

I still expect this year's sales to be ahead of last year's, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy. Many Americans have been saving money and there's a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.

Home affordability is weakening. Various stimulus packages are expected and they will indeed help, but an increase in inventory is the best way to address surging home costs.

The U.S. Federal Housing Finance Agency produces an All-Transactions House Price Index for the United States:

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