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House prices made further strong gains in January, although there are tentative signs that month-on-month growth is starting to ease, warn analysts at Capital Economcis. The Case Shiller Index in January rose 11.2%, the highest rate since February 2006
Key Quotes:
“After seasonal adjustment, Case-Shiller reported a rise of 1.2% m/m, and the FHFA a rise of 1.0% m/m. That pushed annual growth rates up to 11.2% and 12.0% respectively, which was a 15-year high for the Case-Shiller and the highest since records began in 1992 for the FHFA.”
“Record low mortgage rates, a surge in savings and move away from cities have all boosted housing demand in recent months. Combined with record low inventory, that had led to intense competition for homes and pushed prices up. But looking ahead the pressure on home values is set to ease.”
“The reopening of the economy will boost incomes, and there is plenty of pent-up demand from frustrated buyers. Savings will also be elevated for a prolonged period. That will prevent a reversal in the gains seen over the past year. Overall, we expect annual growth will slow to around 3% y/y by end-2021.”
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