U.S. housing prices are rising at the fastest pace in more than 30 years

Growth in U.S. home prices accelerated in April at the fastest pace in more than three decades, as strong housing demand continued to outpace the housing shortage.

The S&P Case-Shiller home price index, which includes nine U.S. census departments, rose 14.6 percent year-on-year in April, data released on Tuesday showed. The report says a 13.3 percent jump in the year occurred in March, and was “the highest reading in more than 30 years.”

Meanwhile, 20 city composites comprising U.S. metropolitan areas, including Dallas, Miami, New York and San Francisco, rose 1.6 percent from the previous month and up 14.9 percent year-on-year.

This was the largest year-on-year increase since December 2005 and compared to the forecast for a 14.5 percent year-over-year increase, according to economists surveyed by Refinitiv.

Phoenix, San Diego and Seattle reported the highest year-over-year gains among 20 cities in April.

“April’s performance was extraordinary,” said Craig Lazzara, CEO and CEO of S&P Dow Jones Indices.

Although the rise has been driven in part by demand for housing in suburban areas linked to the pandemic, he said it could be “an acceleration in purchases that would happen anyway in the coming years.”

U.S. housing prices rose last year as Americans recovered from low mortgage rates and took out suburban homes. This demand, along with a tight housing supply, pushed prices up to record levels. This was exacerbated by significant increases in timber costs earlier this year.

Economists say rising house prices are preventing first-time buyers, although some expect demand for suburban properties to decline as fears of the pandemic disappear.

There are also some indications that the housing inventory has begun to grow. The U.S. Commerce Department said last week supply of new housing sales rose from 15,000 in May to 330,000, 5.8% more than a year ago. This accounted for a 5.1-month supply at the current pace of sales, up from 3.6 months in January.

“The rise in inventory in recent weeks suggests that the market situation may begin to take a break from these reds,” said Matthew Speakman, an economist at Zillow. “But a return to a balanced market is far from over, and there are few, if any, signs that the house price estimate will begin to fall soon.”

Upwards housing prices they have also attracted the attention of Federal Reserve officials.

This week Eric Rosengren, president of the Boston Federal Reserve, told the Financial Times That the US cannot afford a “boom and bust cycle” that would jeopardize financial stability in the housing market. He said it has become commonplace for those who only buy money to dominate Boston’s bidding competitions.

Other Fed officials, including Dallas Cap President Robert Kaplan, have called on the central bank to reassess housing market support through a $ 40 billion monthly purchase backed by the agency’s mortgage.