“A trend of accelerating increases in the National Composite Index began in August 2019 but was interrupted in May and June, as Covid-related restrictions produced modestly-decelerating price gains,” said Craig Lazzara, managing director and global head of Index Investment Strategy at S&P Dow Jones Indices.
“The last time that the National Composite matched August’s 5.7% growth rate was 25 months ago, in July 2018. If future reports continue in this vein, we may soon be able to conclude that the Covid-related deceleration is behind us. ”
S&P Case-Shiller is a repeat sales index, running on a three-month average; it measures the sale prices of similar homes over time. Other home price indexes, like the measure from the National Association of Realtors, show much higher price gains because they calculate the median price of all homes sold during the month.
Since there is currently much more sales activity on the higher end of the market, where there is more supply available, that is skewing the median price much higher. The Realtors reported a 15% annual price gain for September.
Prices are being fueled not just by strong demand but by record-low mortgage rates. Rates set several new records over the summer and continued to do so in September as well. Low mortgage rates give buyers more purchasing power, allowing sellers to raise prices.