Prices for single-family homes rose 5.7% in February from a year earlier, reflecting the condition of the housing market before the COVID-19 pandemic hit the U.S. economy.
The index measuring the purchases of houses using loans backed by Fannie Mae and Freddie Mac rose at a faster pace than the 5.3% annual gain seen a year ago, according to the report Wednesday from the Federal Housing Finance Agency.
“The growth in home prices coincides with other data showing robust housing market activity in early 2020 preceding the current crisis,” said Lynn Fisher, a deputy director at FHFA. “Transactions still do not reflect much, if any, influence from the COVID-19 outbreak as of February.”
Every area of the U.S. posted gains, led by an 8.1% annualized increase in the Mountain region, which includes Colorado and Arizona, a 6.2% gain in the Pacific area that includes California, and a 6.1% advance in the South Atlantic division that includes Georgia and South Carolina.
The Middle Atlantic region that includes New Jersey and New York increased 5.8%, the West North Central area that includes Nebraska and Kansas grew 5.6%, and the West South Central region that includes Texas advanced 4.2%, the report said.
The housing market is likely to be bolstered by low mortgage rates as the nation endures the worst public health crisis in over a century, according to a forecast from Wells Fargo economists.
The Federal Reserve’s pledge to buy unlimited amounts of bonds to support lending probably will drive the average 30-year fixed mortgage rate down to an all-time low of 2.9% in 2020’s second and third quarters, before rising to 2.95% in the final three months of the year, the forecast said.
Housing starts, measuring the number of homes contractors break ground on, probably will stay near last year’s level, the Wells Fargo economists said.
For 2020, housing starts probably will total 1.25 million, compared with 1.29 million in 2019, the economists said. Construction activity in many states has been deemed “essential,” meaning those workers can show up on the job site.