U.S. home prices soared by the most on record for a second consecutive month in May as the COVID-19 pandemic caused buyers to move from city centers to the suburbs.
Home prices surged 16.6% year over year in May, outpacing the 14.8% record in April, according to the national Case-Shiller index. Prices, which have accelerated for 12 straight months, are now 38.1% above their 2006 peak.
"A month ago, I described April’s performance as ‘truly extraordinary,’ and this month I find myself running out of superlatives," said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. "Price gains in all 20 cities were in the top quartile of historical performance; in 17 cities, price gains were in top decile."
Phoenix (+25.9%), San Diego (+24.7%) and Seattle (+23.4%) continued to see the biggest increases, while Chicago (+11.1%) remained the laggard.
Meanwhile, Charlotte (+16.9%), Cleveland (+13.6%), Dallas (+18.5%), Denver (+17.4%) and Seattle all joined the national index in reporting record annual gains.
Every region logged double-digit increases, led by the West (+19.9%) and Southwest (+19.8%).
Economists say new supply hitting the market later this summer will help alleviate the upward pressure on prices. A report released Monday by the U.S. Census Bureau and Department of Housing and Urban Development showed new home inventory last month rose to a seasonally adjusted annualized rate of 353,000, or a 6.3-month supply, the most since at least May 2020.
"Improvements in availability of new listings will help release the tremendous pressure that competing buyers have put on home prices and home price growth, which is likely to slow by the end of the summer," said Selma Hepp, deputy chief economist at CoreLogic.