Phoenix, Tampa and Miami were the hottest real estate markets in October, topping the U.S. housing market as the prices of homes continued to increase.
According to the S&P CoreLogic Case-Shiller 20-city home price index released on Tuesday, people buying a home in October could expect to pay 18.4 percent more compared to the year before.
The cities leading October housing markets were Phoenix with a 32.3 percent increase, Tampa with a 28.1 percent increase and Miami with a 25.7 percent increase. All 20 cities on the home price index had double-digit gains for the year.
The housing market boomed after the perfect storm of low mortgage interest rates, a limited supply of homes and demand from people wanting to move to a bigger space after being cooped up inside for the last year because of the COVID-19 pandemic.
People looking to buy a home in November could expect to pay a big price as the median sale price for a new home was $416,900.
The sales of previously lived-in homes increased for the third month in a row in November with an annual rate of 6.46 million, according to the National Association of Realtors.
"Home price growth will slow further in the year ahead, but continue to go up,″ said Danielle Hale, chief economist at Realtor.com. "As housing costs eat up a larger share of home purchaser's paychecks, buyers will get creative. Many will take advantage of ongoing workplace flexibility to move to the suburbs where despite home price gains, many can still find a lower price per square foot than nearby cities.″
It remains unclear if that shift is permanent or an aberration, said Craig Lazzara, managing director at S&P Dow Jones Indices.
"We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic,'' Lazzara said. "More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred over the next several years, or reflects a more permanent secular change.''
Last week, mortgage rates fell — to 3.05 percent for the benchmark 30-year, fixed-rate and 2.66 percent for the 15-year fixed-rate home loan. The persistently low rates signal that credit markets appear more concerned about the omicron variant depressing economic growth than about the highest inflation rates in nearly 40 years.
The S&P CoreLogic Case-Shiller 20-city home price index said the October gain marked a slight deceleration from a 19.1 percent year-over-year increase in September but was about in line with what economists had been expecting.
The home index also reported that Minneapolis and Chicago had an 11.5 percent increase in annual gains.
The Associated Press contributed to this report.
