San Diego home prices continued to increase into COVID-19's second month and grew at a quicker pace than other California cities.
Home prices in the San Diego metropolitan area had risen 5.8% in a year, the S&P CoreLogic Case-Shiller Indices reported Tuesday. It was the highest annual increase since July 2018.
Across the United States, home prices in April were up an average of 4.7% with experts attributing the rise to a shortage of homes for sale, low mortgage interest rates and high demand from before the crisis continuing.
"The price trend that was in place pre-pandemic seems so far to be undisturbed, at least at the national level," said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
Phoenix had the biggest annual increase of the 19 cities covered by the index at 8.8%. It was followed by Seattle at 7.3% and Minneapolis at 6.4%. One city normally on the index, Detroit, was left off because its recording office was closed as a result of the pandemic. Chicago had the smallest gains at 1.4%.
Other California cities were behind San Diego's nearly 6% gain, with Los Angeles at 4.1% and San Francisco at 2.8%.
Selma Hepp, deputy chief economist for CoreLogic, said a lot of factors that pushed up demand in the months before COVID-19 have continued, and may even have accelerated.
"Supply headwinds, such as declining for-sale inventories, will continue to keep a lid on the number of transactions but also push up home price growth," she wrote.
National homebuilding slowed considerably during the Great Recession, as the population continued to grow, which many analysts say created a lack of homes for sale. More recently, a drastic increase in sellers pulling homes off the market to wait for the virus to go away have been attributed to price wars for a limited number of properties.
In San Diego County last year, the smallest number of housing units (apartments, single-family homes and condos) were built since 2014. The 8,053 homes constructed represented a 16 percent drop in construction, said the Real Estate Research Council of Southern California, and was the biggest homebuilding drop in Southern California. In April, the same time as the Case Shiller report, there were about 5,160 homes listed for sale, said the Redfin Data Center, a drop of 27% from the same time last year.
Zillow economist Matthew Speakman wrote that the April index illustrates how low mortgage interest rates fueled demand even as there were fewer homes to chose from and drove up prices.
The mortgage rate for a 30-year, fixed-rate loan was 3.31% in April, said Freddie Mac, down from 4.47% at the same time last year.
"Substantial risks remain and the longer-term outlook for home prices is still very much unclear, but at least for now," Speakman wrote, "the housing market continues to cruise through this historic downturn more or less unscathed and prices seem poised to continue their ascent for the coming months."
The Case-Shiller indices take into consideration repeat sales of identical single-family houses as they turn over through the years. Prices are adjusted for seasonal swings. The San Diego County median home price for a resale single-family home in April was $650,250, said CoreLogic data provided by DQNews.
