US home price growth hits two-year high

'In a lot of places outside urban areas, real estate has kind of gone through the roof'

U.S. home prices are increasing at a fast clip, which could make it even more challenging for prospective buyers to find a property amid an ongoing inventory shortage.

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Home prices accelerated at an annual rate of 11.1% for the week ending Sept. 12, according to data from Realtor.com. That growth was driven by a drop off in listings in the West and South due to the wildfires and hurricanes, as well as the Labor Day holiday.

The number of new listings fell 17% when compared with the same period last year – while the total number of homes for sale is down 39%.

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“Home price growth just set a new high of 11% with no indication of a slowdown and there are nearly 40% fewer homes for sale than this time last year," Danielle Hale, chief economist for realtor.com, said in a statement. "Inventory is so low that any disruption, such as this week's wildfires and hurricanes, feels even more stifling for would-be home buyers.”

Hale added that inventory normally tapers off over the coming weeks during an average year, a trend she expects to see this year, too. However, she does not expect that the appetite among buyers will diminish in accordance with seasonal patterns.

Existing home sales in July rose nearly 25%, while new home sales rose more than 36% year over year.

The average sales price of new houses sold in July 2020 was $391,300.

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Interest rates, meanwhile, continue to sit at historic lows, making the environment favorable for prospective buyers.

Serhant founder and CEO Ryan Serhant told FOX Business during an interview on Thursday that real estate was “on sale” for a while during the pandemic, but even as prices rise people are still purchasing.

“In a lot of places outside urban areas, real estate has kind of gone through the roof,” Serhant said.

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