U.S. Home Price Gains Continue Through Third Quarter

Home prices across the United States continued to climb in September, rising 7.8 percent in the 12 months since October 2019, according to Radian Home Price Index (HPI) data by Red Bell Real Estate, LLC, a Radian Group Inc. company (NYSE: RDN). The Radian HPI offers a measure of U.S. housing market prices and conditions.

Since the start of the year, the Radian HPI has risen at an annualized rate of 7.4 percent, which was higher than the increase of 6.4 percent recorded during the first nine months of 2019. During the third quarter (July–September 2020) national home prices increased at an annualized 8.9 percent, which outpaced the 6.8 percent annualized gains during the second quarter (April–June 2020), where home prices gains were more subdued. 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. 

“After slower home price growth in the second quarter, the third quarter of 2020 showed a clear return to the faster price appreciation reported at the end of 2019,” noted Steve Gaenzler, SVP of Data and Analytics. Gaenzler added that “until there are clear signs of a change in the substantial imbalance in supply and demand, all signs would point to a continuation of gains for home prices. However, it is not unlikely that as prices continue to rise, affordability concerns may begin to cool appreciation rates in some markets.” 

  • Median estimated home price in the U.S. rose to $262,505
  • Constrained listing supply impacting home sales

Properties listed for sale typically experience large increases during the spring and summer buying season compared to winter volumes. In fact, since 2008, the seasonal high in count of active listings has been, on average, more than 20 percent higher in spring and summer than the prior winter lows. These increases in supply are needed to meet the demand from buyers active in the same periods. More recently, in each of the last five years, the peak has been at least 25 percent higher. However, in 2020, the pandemic significantly subdued listing activity, creating a strong imbalance in supply and demand. The count of active listings as of July 2020 was only 8 percent higher than that of December 2019, lower than any period even during the Great Recession. This alone represents a decrease of nearly 165,000 listings nationwide that would normally have been available to active buyers.

 Nationally, demand for property purchases also remained at all-time highs. Counts of residential home sales were significantly higher than in any 3rd quarter. In total, the number of closed home sales was 39 percent higher than the average third quarter going back to 2007. The combination of the dearth of listings with all-time record sales volume has put upward pressure on home prices nationally.

  • All Regions continue to grow
  • Northeast and South hit 2020 appreciation rate highs

In September, all six Radian HPI Regional indices recorded positive annual home price appreciation rates. Home price appreciation accelerated in all regions compared to the month prior with the Northeast and South Regions both appreciating at their strongest monthly rate of 2020. 

While all Regions showed positive price appreciation this month, regional and state differences do impact how quickly properties are selling. The average length of time properties that sold in the month of September were listed prior to their sale tied an all-time low of 89 days on market (DOM). Of the ten states with the largest number of sales in September: Texas, Florida, Ohio and Washington all recorded below median DOMs at 88, 75, 70 and 71 days

respectively. The states with the longest time on market before selling in September included the Northeast states of Vermont and Maine (205 and 150 DOM respectively) and the Mid-Atlantic states of New York, Connecticut and New Jersey (134, 130 and 118 days respectively).

  • Half of the large cities recorded faster appreciation in September
  • Large cities continue to appreciate at a faster rate than before the pandemic 

In September, half of the top 20 metropolitan areas (CBSAs) reported faster appreciation rates than the prior month. However, compared to the second quarter, the third quarter recorded faster appreciation rates in 19 of the 20 largest metros. Other than Phoenix, all of the metros that recorded faster appreciation rates in September compared to August were located within 50 miles of an ocean or the Chesapeake Bay, with most being in the South or West regions. All the top-20 largest metropolitan areas in Texas and the Midwest slowed their appreciation rates in September. 

Additional content on the housing market can also be found on the Radian Insights page located at https://radian.com/news-and-knowledge/insights.