By Evan Sully
(Reuters) -U.S. single-family home prices in 20 key urban markets rose in June from a year earlier at the fastest pace on record, a closely watched survey showed on Tuesday.
The S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas gained 19.1% through the 12 months ended in June from an upwardly revised 17.1% in the 12 months through May, marking the largest annual price increase in the survey's two decades. A Reuters poll of economists had forecast an increase of 18.5%.
On a month-to-month basis, the 20-city composite index rose 1.8% from May, in line with estimates from economists polled by Reuters.
Among the 20 cities, Phoenix, San Diego, and Seattle reported the largest year-over-year gains in June.
A separate report from the Federal Housing Finance Agency (FHFA) on Tuesday showed its house price index rose a record 18.8% in the 12 months through June. House prices surged 17.4% in the second quarter compared to the same period in 2020.
The FHFA's index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac (OTC:FMCC).
Home prices have surged this year as a result of limited supply and increased demand from potential buyers seeking to enter the market. In comparison to the run-up prior to the 2007-2009 financial crisis, the current boom does not include a frenzy of speculators and buyers with low credit scores purchasing homes and trying to flip them.
"Today’s S&P Case Shiller Index spotlights a hot summer’s housing market, where buyers prepared with cash for down payments and low interest rate loans placed competing bids for an evaporating supply of homes available for sale and drove prices higher," said George Ratiu, manager of economic research for Realtor.com.
Contracts to purchase previously owned homes declined for the second consecutive month in July in step with limited supply that's been unable to match demand from potential homebuyers, the National Association of Realtors (NAR) said on Monday.
"Rising prices during summer months reflected a combination of peak demand and larger homes for sale, as families with school-age children competed to secure a place for the new school year," Ratiu said. "In a noticeable shift, July saw real estate markets welcome a larger influx of new listings, as homeowners across the country decided to move on with pandemic-delayed plans to sell."