Home Prices Kick Off 4Q With Slightly Slower Gains

After a very strong third quarter, home prices across the United States continued to climb in October albeit at a slower rate than in September, rising 7.5 percent in the twelve months since November 2019, according to Radian Home Price Index (HPI) data released today by Red Bell Real Estate, LLC, a Radian Group Inc. company (NYSE: RDN). The Radian HPI is the most comprehensive and timely measure of U.S. housing market prices and conditions.

Since the start of the year, the estimated median home price has increased by an absolute, not annualized, rate of 6.7 percent, which was higher than the increase recorded in the same period of 2019. The monthly annualized increase recorded in October, while slower than September, was still the second-best appreciation month in 2020. The Radian HPI is calculated based on the estimated values of more than 70 million unique addresses each month, covering all single-family property types and geographies.

“The end of the traditional summer season has collided headfirst into the second wave of COVID-19 across the U.S. As such, we would expect that the coming months, similar to the initial wave, will show slowing appreciation rates for homes,” noted Steve Gaenzler, SVP of Data and Analytics. Gaenzler added that “lessening demand for housing due to typical seasonal patterns may reduce pressures seen through the first ten months of 2020, however, without active supply increases home prices should continue to grow.”

NATIONAL DATA AND TRENDS

• Median estimated home price in the U.S. rose to $264,585
• October records highest sales for any October, on continued demand

Nationally, the median estimated price for single-family and condominium homes rose to $264,585. Since the start of 2020, the median estimated home price in the U.S. has increased more than $16,667. By region, median home estimates are more than $30,000 higher in the West region than they were at the end of 2019; the highest dollar gain so far this year. Prices in the MidAtlantic region are higher by a lesser, $12,200 over the same period, representing the least absolute gain by a region.

Nationally, demand remained vigorous for home purchases. Sales of residential homes were at an all-time high for any October on record. In total, the number of closed home sales was 49 percent higher than the average October going back to 2007, and nearly 20 percent higher than October of 2019, the prior record October for sales. Even with the headwinds of 2020 on real estate, the total count of sale transactions will surpass the 2019 prior full year record if the final two months average only 235,000 sales per month, an amount 25 percent lower than the average month so far this year.

The combination of all-time record sales volume with significant supply challenges has been the driving force behind increasing home values throughout 2020.

REGIONAL DATA AND TRENDS

• All Regions continue to appreciate
• Midwest continues to shine compared to other Regions

The regional story of slightly slower price gains is playing out similarly across all six of our Regional indices. In October, the annualized price gains from the month prior were all lower. However, with the exception of the Midwest Region, all of the Regions still recorded the second or third strongest monthly appreciation of the year. The Midwest region continues to possess the largest annual increase compared to the other Regions. The Northeast continues to be the weakest Region over the last twelve months.

At the state level we note that in the last 12 months (October 2019 through October 2020), home price appreciation rose in all 50 states, ranging from nearly unchanged to an increase of more than 15 percent. Idaho has recorded the largest rate of price appreciation over that time period with an annual increase of 15.6 percent. In total, six states have recorded double digit increases in median home prices. Maryland, North Dakota and Delaware logged the softest rates of home price appreciation over the last year.

METROPOLITAN AREA DATA AND TRENDS

• The majority of the nation’s largest cities recorded faster appreciation in October
• Smaller, big cities outperform the biggest metros year-to-date

In October, 13 of the top 20 metropolitan areas (CBSAs) reported faster appreciation rates than the prior month, and 7 of them recorded the fastest monthly appreciation rate of 2020. Those achieving the fastest appreciation rate of the year include East Coast cities such as Philadelphia and Boston, Southern cities including Dallas and Houston, and western cities including San Francisco and Seattle.

When we expand our lens to include the 50 largest cities across the country, 23 of them reported faster appreciation rates in October as compared to the month earlier. Of those 23, 11 of them reported the fastest monthly appreciation rate of the entire year. Year-to-date, the top 5 cities for price appreciation are Boise, ID, Indianapolis, IN, Burlington, VT, Salt Lake City, UT, and Milwaukee, WI, each with median estimated prices that are more than 10 percent higher than the estimated value at the end of 2019. So far in 2020, Seattle has the largest dollar gain of the top 50 cities with median estimated values more than $55,000 higher than the end of 2019.