Daily Spotlight: House Prices Surging

The housing market -- a major pillar of U.S. economic growth pre-pandemic -- is rebounding. Existing home sales, which were down 32% in May from January, have been rising consistently since late spring and are closing in on a 100% increase from May lows. Building permits, which are a leading indicator for the industry, peaked in January at 1.55 million units and are now back above that level (data through November). They too have lifted more than 50% from April's lows. Prices have held up as well. The S&P/Case-Shiller National Home Price Index is one of the most closely watched barometers of the housing market. Data for October 2020 showed that prices gained 7.9% year-over-year -- the highest rate in six years. Meanwhile, inventory levels are tight: currently there is a low 4.1-month supply of existing homes for sale (the average range is 4.5-7.5 months), according to the U.S. Census Bureau. On the other side of the pandemic, we expect demand for homes -- with yards between neighbors and no elevator buttons to press -- will remain strong.