US home prices grow sharply in October and the market shows no signs of slowing down after reporting a record data during the previous month. US house and home prices are now back above where they were pre-crash. The index S&P/Case-Shiller, which tracks housing prices in the country increased by 5.6% in the 12 months to the end of October after the September growth was 5.4%.
The most active markets remain concentrated in the northwestern states. In Seattle, Washington the reported growth is 10.7%, followed by Portland, Oregon with increase of 10.3%, and Denver, Colorado with growth of 8.3%.
The index S&P/Case-Shiller provided late data and does not reflect the sharp increase in mortgage rates that began after the victory of Donald Trump’s presidential election in November. Higher rates put pressure on price growth as rising monthly expenses to repay the home loan. Moreover, the home prices are growing faster than income and this carries risks for the market in 2017.
Monthly and seasonally adjusted index for the US increased by 0.9% in October.
A decade ago, growth in the housing market was driven primarily by loose and predatory lending, speculation and over-building — forces that only served to artificially inflate and overheat the market. The growth seen today is, instead, a natural reaction to basic economic fundamentals. More and better opportunities for American consumers means high demand for housing, and that demand is not being met by an adequate supply of homes for sale and so prices rise.
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