US House Prices Outperforming Expectations
- By Sam van de Schootbrugge
- 3 min read
Residential housing markets shone globally last year. Yet, among the few countries that have published annual growth rates for 2020, the size of the US house price rally stands out (Chart 1). According to the National Association of Realtors (NAR), median home prices rose 12.9% to $309,800 in 2020. This compares with a significantly lower 5% average over the previous decade. Furthermore, YoY changes in October 2020 reached 15.5%, a rate last bettered exactly 15 years ago (Chart 2).
The latest NAR volume data captured the pandemic-induced buying frenzy. On average, the number of home transactions grew 0.3% MoM between 2010 and 2019. This figure increased to 3.6% nationwide during the pandemic, with the Northeast experiencing the largest rise (Chart 3). Interestingly, the market action has been at the top end of the home valuation scale – the share of transactions among houses above $750,000 has shot up, perhaps reflecting relocation away from more expensive urban areas (Chart 4).
Data from Zillow shows that the main beneficiaries of the urban-to-rural migration are Idaho, Arizona and Utah (Chart 5). The typical home in Idaho, valued between the 35th and 65th percentile, has increased on average 1.5% per month during the pandemic, compared with 0.5% between 2010 and 2019. The District of Columbia (Washington D.C.) is the only state to have seen slower house price growth.
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