WASHINGTON – U.S. home prices rose at the fastest 12-month pace in more than three years in 2017, as potential home buyers fought over a limited number of available properties.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index jumped 6.3 percent in 2017, the most since June 2014. Home prices are rising much faster than wages and overall measure of inflation.
Steady hiring and broad economic growth are making it easier for more Americans to afford a house, spurring demand. Yet fewer Americans are listing their homes for sale, in some cases because they would face a higher mortgage rate if they bought a new home. The number of homes for sale in January was the lowest for that month on records dating back to 1999.
Washington as a whole continues to lead all U.S. states in home-price increases, as it has since the middle of 2016, according to CoreLogic.
The Case-Shiller reports only cover large metropolitan areas. However, a separate home price index released by the government Tuesday, which covers all metro areas, showed Washington had five of the nine hottest housing markets in the country in the fourth quarter of 2017.
In addition to Seattle, prices were up 14.6 percent over the past year in the Tacoma-Lakewood area, 12.9 percent in Mount Vernon-Anacortes, 12.2 percent in Bellingham and 12 percent in Wenatchee, according to the Federal Housing Finance Agency.
Not far behind: Prices are up 10.5 percent in Bremerton-Silverdale, 9.6 percent in Kennewick-Richland, 9.2 percent in Olympia-Tumwater, 8.2 percent in Spokane-Spokane Valley and 8 percent in Yakima.
David Blitzer, managing director at S&P Dow Jones indices, compared the run-up in home prices to the stock market gains of the past year.
“The rise in home prices should be causing the same nervous wonder aimed at the stock market after its recent bout of volatility,” Blitzer said. “We are experiencing a boom in home prices.”
Home prices in the S&P CoreLogic Case-Shiller 20 city index have soared 62 percent from their low point in the housing bust, Blitzer said. That’s much faster than the 12.4 percent increase in inflation.
Still, sales of existing homes have stalled in the past two months and may remain slow in response to sharp increases in mortgage rates since the beginning of the year. While the average 30-year mortgage rate of 4.4 percent is low by historic standards, that’s up from 4 percent at the beginning of the year. Sharp increases can slow sales.
A persistent slowdown in sales could rein in the pace of price appreciation. That might force some homeowners to list their homes for sale, before price gains slowed further, Aaron Terrazas, senior economist at Zillow, said.
Existing home sales dropped in January by the most in three years. New home sales also fell in January. Unseasonably cold weather may have pulled down sales across the board.
The Seattle Times contributed to this report.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe to the Coronavirus newsletter
Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.