Phoenix has once again topped the Nation in home price growth

PHOENIX --- Phoenix has once again topped the nation in home price growth, according to new data released in the S&P CoreLogic Case-Shiller Index.

The S&P CoreLogic Case-Shiller Index, a leading measure of U.S. home prices, released their August 2021 report last Tuesday. The report detailed the average housing prices for 20 U.S. cities and placed Phoenix at the top for year-over-year gains for the 27th consecutive month.

The Phoenix-Mesa-Scottsdale metropolitan area had a 33% year-over-year increase, meaning that home prices in the area were 33% higher in August 2021 than in August 2020, said the report.

The next highest cities were San Diego with a 26.2% increase and Tampa with a 25.9% increase, according to the report.

The report also revealed that the 20 cities had an average of a 19.7% year-over-year gain, making the Phoenix housing growth rate a significant outlier.

For Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indexes, the price growth may be due to buyer demand going up due to the COVID-19 pandemic.

“We have previously suggested that the strength in the U.S. housing market is being driven in part by a reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes,” said Lazzara in a press release.

Lazzara is unsure that the pandemic was the only reason for the surge in housing prices, though.

“More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred anyway over the next several years, or reflects a secular change in locational preferences. August’s data are consistent with either explanation,” said Lazzara.

Tina Tamboer, Senior Housing Analyst at The Cromford Report, agrees.

“We were already struggling before the pandemic, we were already on this track. The pandemic just exacerbated it,” said Tamboer.

But why Phoenix?

She believes that rising housing prices are due to a mix of population growth and a lack of housing units.

“What caused the surge is essentially a perfect storm of the surge of population and a 10 year lag of home growth to accommodate for the population we already had,” said Tamboer.

“We did not build enough homes for the people moving here. And then we saw a surge of people moving here all of the sudden when we already didn’t have enough homes,” she continued.

While the growth in housing prices may be alarming to many Phoenix residents, there may be a light at the end of the tunnel.

“August data also suggest that the growth in housing prices, while still very strong, may be beginning to decelerate,” said Lazzara.