Home prices in October were up 6.2 percent from a year ago amid buoyant consumer confidence fueling strong demand from buyers.
Prices were up the most in Seattle, Washington, which registered a 12.7 percent year-over-year price increase, according to the S&P CoreLogic Case-Shiller home price indices. It was followed by Las Vegas with a 10.2 percent increase and San Diego with an 8.1 percent increase.
“Underlying the rising prices for both new and existing homes are low interest rates, low unemployment and continuing economic growth,” said David M. Blitzer, Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices.
The weakest gains were in Washington, DC, where home prices rose just 3.1 percent compared with the prior year. This suggests that Donald Trump’s first year in office has been better for the rest of the country than for Washington, DC, a marked change from many of the Obama administration years.
Rapidly rising home prices may convince some would-be buyers to turn to renting instead, particularly if interest rates continue to rise and make mortgages more expensive.
“Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting. Data published by the Urban Institute suggests that in some West coast cities with rapidly rising home prices, renting is more attractive than buying,” Blitzer said.