US home prices in 2021 saw their biggest increase in at least 34 years, according to data released Tuesday, as buyers spent the year snapping up homes and builders struggled to keep up.
Home prices surged 18.8 percent last year, according to the S&P CoreLogic Case-Shiller US National Home Price index, the biggest jump in its existence and much more than the 10.4 percent jump seen in 2020.
The US real estate market last year saw the most existing homes sold in 15 years, with sales topping six million even as supply sunk to an all-time low by the close of the year.
Builders have had to deal with double-digit increases in material costs as well as a shortage of workers.
That pushed home prices higher, and played a role in consumer prices experiencing their largest jump in decades.
The inflation wave is expected to ease this year as the Federal Reserve raises interest rates and global supply chain snarls ease, and Craig J. Lazzara, Managing Director at S&P Dow Jones Indices, predicted higher lending rates may also cool the housing market.
"In the short term... we should soon begin to see the impact of increasing mortgage rates on home prices," he said.
The home price increases were most severe in Phoenix, where they rose 32.5 percent. In Tampa, the jump was 29.4 percent, and in Miami 27.3 percent.
Lazzara said jump in prices compared to 2020 appeared to be moderating near the end of the year, but in December, they ticked upwards again.
As for the causes of the house-buying boom, "We have previously suggested that the strength in the US housing market is being driven in part by a change in locational preferences as households react to the Covid pandemic," he said.
"More data will be required to understand whether this demand surge simply represents an acceleration of purchases that would have occurred over the next several years rather than a more permanent secular change."
