Wall Street Journal writer Laura Kusisto reported this week that, “U.S. home prices rose in January at their fastest rate since mid-2014, a trend that bodes well for sellers but could start to eat into demand as buyers get priced out of the market.
“The S&P CoreLogic Case-Shiller Indices, which cover the entire nation, rose 5.9% in the 12 months ended in January, the strongest increase in 31 months, up from a 5.7% year-over-year increase in December.
“The 10-city index gained 5.1% over the year, up from 4.8% the prior month, and the 20-city index gained 5.7%, up from a 5.5% increase.”
The Journal article noted that, “The accelerating gains are being driven by job growth, a large demographic of people entering their 30s and looking to buy homes, and limited supply of homes on the market.
“Economists said it isn’t sustainable for price growth to outpace income growth for long, however. Wages are rising at about 2.5%, much slower than home prices.”
Ms. Kusisto explained that, “Limited supply is a big driver of the price gains. Inventory in December hit its lowest level since 1999, when the National Association of Realtors started tracking the data. The number of homes for sale was down 7.1% in January compared with a year earlier, the Realtors said. It has since ticked up slightly, but inventory in February remained 6.4% below a year earlier.”
