U.S. home prices, fueled by the lowest mortgage rates in history, rose at the fastest pace on record, surpassing the peak from the last property boom in 2005.
The median price of a single-family home climbed 14.9% to $315,000 in the fourth quarter. That was the biggest surge in data going back to 1990, according to the National Association of Realtors.
The Northeast led the way with a 21% gain as buyers rushed to the suburbs. Fairfield County, Connecticut, home to Greenwich and other tony towns, rose 39% for the biggest increase in the U.S.
The pandemic property boom has been driven by low borrowing costs and flexible work policies that allow Americans to live where they want. People are leaving expensive cities like New York and San Francisco relocating to more affordable areas. Even with high unemployment, prices are soaring across the U.S. because there’s an increasingly short supply of existing homes to choose from.
Prices rose in all 183 metros measured by the group and 161 had double-digit growth compared with just 115 of them in the third quarter.
Low rates have boosted buying power for home shoppers, but that won’t last, according to Lawrence Yun, chief economist at NAR.
“The average working family is struggling to contend with home prices that are rising faster than income,” Yun said in the statement. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”