Low Inventory, High Demand Drive U.S. Home Prices to 15% Increase

U.S. home prices rose nearly 15 percent in April, compared with the previous year, as more buyers sought deals amid a finite supply of houses. The pace of rising prices is the fastest since 2005, the Associated Press reported.

The S&P CoreLogic Case-Shiller 20-city home price index, released Tuesday, said April's increase was up 1.6 percent from March, which had a 13.4 percent annual gain.

A desire for larger living spaces since the onset of the coronavirus pandemic has increased demand for suburban homes over apartments and urban housing, the AP said. Low mortgage rates and a higher interest in buying homes among millennials have coincided with the rising prices, which economists say won't slow down anytime soon.

"The forces that have propelled home price growth to new highs over the past year remain in place and are offering little evidence of abating," said Matthew Speakman, an economist at Zillow.

For more reporting from the Associated Press, see below:

Home Sales
A real estate sign in front of a newly constructed single-family home on June 24 in Auburn, New Hampshire. U.S. home prices soared in April at the fastest pace since 2005 as Americans bid up prices on a limited supply of available properties. Charles Krupa/AP Photo

All 20 cities that make up the index reported higher year-over-year price gains in April than the previous month. Five cities—Charlotte, Cleveland, Dallas, Denver, and Seattle—had the largest 12-month price increases on records dating back 30 years.

Even as demand rose during the pandemic, fewer Americans were willing to sell their properties, perhaps reluctant to have waves of potential buyers troop through their homes. That sharply reduced the number of houses available, setting off bidding wars for most properties. Last month, nearly half of homes sold were selling for above their asking price, according to realty company Redfin.

In May, the number of available homes ticked up slightly, to 1.23 million. But that was still down 21 percent, compared with a year earlier.

Sales of existing homes have fallen for four straight months, likely because soaring prices have discouraged some would-be buyers. Still, demand is strong enough that a typical home was on the market for just 17 days last month, the National Association of Realtors said. Nearly nine of 10 homes were on the market for less than a month.

Phoenix reported the largest price gain in April for the 22nd straight month, according to the Case-Shiller index, with an increase of 22.3 percent from a year earlier. San Diego followed at 21.6 percent, followed by Seattle at 20.2 percent.

Open House
Real estate agents Rosa Arrigo, center, and Elisa Rosen, right, at an open house in West Hempstead, New York, on April 18. Raychel Brightman/Newsday RM via Getty Images