U.S. home prices jumped in February as buyers compete fiercely over a dwindling number of properties for sale.
The S&P CoreLogic Case-Shiller national home price index released Tuesday jumped 6.3 percent in February from a year earlier, matching December’s increase. That jump was the largest in nearly three years.
Steady job gains and rising numbers of millennials moving out on their own has intensified the competition for homes. February’s price gain far outpaces average increases in wages or inflation.
Americans are becoming reluctant to sell their homes as mortgage rates rise, preferring to renovate instead. Others are holding onto their homes because they see few other options available. That’s kept supply tight: The number of homes for sale fell 7.2 percent in March from a year earlier to just 1.67 million.
Sales of existing homes ticked up in March but actually declined slightly from a year earlier as the housing shortage constrained sales.
Homebuyers are getting increasingly aggressive, snapping up homes an average of 30 days after they are listed in March, down from 34 days a year earlier.
“Competition is fierce, offer windows are short and tensions will inevitably run high for many buyers as the spring shopping season unfolds,” Svenja Gudell, chief economist at real estate data website Zillow, said.
There are signs that the supply crunch could ease later this year, as listings have picked up in recent months, only to be quickly sold. And developers are breaking ground on more homes, lifting single-family home construction 5.2 percent in March compared with a year earlier.
Seattle, Las Vegas and San Francisco remain the nation’s top real estate hot spots, with home prices jumping 12.7 percent in Seattle, 11.6 percent in Las Vegas and 10.1 percent in San Francisco.
Strong job gains in some cities, which hint at an influx of new residents, are pushing up home prices, Standard & Poor’s said. Seattle reported the biggest increase in employment, and had the largest home price gain. Chicago ranked 19th out of the 20 cities tracked in both home price increases and employment. Cleveland came in at 18th place in home prices and 20th in employment.
But in San Francisco and Los Angeles, home prices are rising much faster than their job gains would suggest, a sign that regulatory limits on homebuilding and limited land availability are pushing prices eve higher.