Home prices reached record highs in April as the housing market continued to boom, with home prices in areas around cities climbing at the fastest rate on record.
Average home prices in metropolitan areas, measured by the S&P CoreLogic Case-Shiller National Home Price Index, rose 14.6% between April 2020 and April 2021, according to an analysis released Tuesday. The increase is the highest annual rate of housing price growth the index has measured, according to The Wall Street Journal.
Meanwhile, the Federal Housing Finance Agency (FHFA) U.S. House Price Index, which measures single-family home prices, climbed 15.7% between April 2020 and April 2021, also a record rate of growth according to WSJ.
Skyrocketing prices have led to some buyers attempting to wait out the market.
“People were going crazy with the offers they were making,” Andy Rodrigues, a prospective home buyer in Seattle, told WSJ. “At some point, we actually decided to stop house hunting and just go and rent because we found it was really difficult.”
“Houses that just go on the market have no availability for showings,” first-time Colorado home buyer Kristin Mallory told MarketWatch. “When you do find something that fits your parameters, you are outbid.”
A combination of low interest rates, high demand, and constrained supply has led to the rapid price increase, according to MarketWatch.
“Current demand is built on a significant growing demographic wave, as we have many millennials turning 30 — a key age for first-time home buying,” Danielle Hale, chief economist of Realtor.com, told MarketWatch.
Rising housing prices can also be attributed to the high cost of building new homes, Bloomberg reported. The COVID-19 pandemic lockdowns caused significant supply chain dysfunction which, along with problems in the labor market and increasing inflation, increased the prices of building materials such as lumber, according to Bloomberg.
“When we’re talking about the price and availability of lumber, we’re talking about housing-affordability conditions,” Robert Dietz, chief economist at the National Association of Home Builders, told Business Insider.
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