Last month, Before the Bell observed early signs that the red-hot global housing market could be starting to cool, as elevated prices appeared to hurt demand and home improvement spending eased.

We may have called the top too soon. What’s happening: US home prices rose 18.6% in June compared to one year earlier and 16.8% versus May, according to the S&P Corelogic Case-Shiller Index released this week. In Phoenix, home prices jumped 29% year-over-year, while San Diego logged a 27% increase. It’s the third month in a row that the rate of house price increases set a record.

Over in the United Kingdom, annual house price growth rose to 11% in August from 10.5% in July, according to new data from the Nationwide Building Society. Prices were up 2.1% month-on-month, the second largest monthly gain in 15 years. In Australia, while there are some signs the housing boom is moderating, home values still rose 1.5% in August, according to CoreLogic’s latest Home Value Index. This rate of growth remains “well above average,” CoreLogic said. The Reserve Bank of New Zealand, for its part, recently said house prices are “above sustainable levels.”

What gives: Low borrowing costs and work-from-home upgrades are still supporting demand, even as some would-be buyers scoff at the scale of recent price increases. Yet in a research note published this week, Goldman Sachs emphasized another factor. “While low mortgage rates and the shift to working from home are also fueling housing demand, one under-appreciated reason for the price boom is that housing supply is very tight,” the investment bank’s economists said. Price increases would normally feed a boom in the construction of new houses. But this hasn’t materialized, thanks to raw material and labor shortages, as well as land regulations, according to Goldman. “While the easing of temporary bottlenecks, such as material constraints and pandemic labor supply effects, should support an eventual recovery in supply … more persistent constraints, such as land use regulations, should continue to push up house prices in coming quarters, especially in the US, Canada, and UK,” the bank predicted. In short: Even if demand starts to waver, supply problems could bolster prices for some time.

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