Yahoo Finance's Dani Romero discusses the slowdown in home price growth and how the pandemic has pushed many Americans into suburban homes.

Video Transcript

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- Welcome back. US home prices surged again in October as the housing market continues to boom in the wake of last year's coronavirus recession. For more on this, joining us now is Yahoo Finance's Dani Romero. And Dani, looking at prices up 18%, 19% over a year, over the last year and pretty soon we're talking about real money, what's going on?

DANI ROMERO: Yeah, Jared, that's right. Home prices hit those double digit rates in October, according to S&P CoreLogic Case-Shiller, a 20 city home price index. And that momentum has not stopped. Let's take a look at that breakdown. National home prices rose 19.1% year over year on an unadjusted basis, which is a decrease from an annual rate of 19.7% in September.

Home prices also rose to 18.4%, which came in close to analysts' expectations of 18.5%, according to Bloomberg consensus-- consensus. Now, where are these hot markets and where are people buying in? Well, Phoenix was up 32.3%, Tampa 28.1%, Miami, Jared, your hometown was up at 25.7%, Minneapolis and Chicago had the smallest increases of 11.5% each.

But this swift pace isn't really a surprise, all thanks to the rock bottom mortgage rates as well as the limited supply of homes on the market, and also that pent up demand from consumers. This October reading was the fourth highest reading in the National Index's 34 years of data.

The pandemic has really driven many to look for homes in suburban areas as they look for a little bit more space as offices remain closed due to the uptick of coronavirus cases. Yet many homeowners have also been reluctant to sell during the pandemic because of the construction of new homes, which has been hit by shortages of material, land, and also labor.

- And, hey, Dani, I want to ask you really quickly. You know, it's shocking to see that these prices continue to rise and that September was even higher, right? At 19.1%. Supply gaps are driving so much of this problem but do we expect this boom to continue or does it ease up next year?

DANI ROMERO: Yeah, that's a really good question. Well, it's still unclear if really this surge is a permanent or temporary according to housing experts but the most recent data it really indicates that the rising prices also continued in November.

According to the National Association of Realtors, the median sales price for both new and existing homes sold in November increased at a faster pace than October. However, remember, rising prices is a little bit of bad news for first time homebuyers.

In November the share of first-time homebuyers fell to 26% from 32% a year ago. So yet I've heard from a new survey, from realtor.com, excuse me, that first time homebuyers are actually expecting some optimism next year and are hoping that new inventory will come into play as well, next year.

- Well, with 25% price increases in Miami, Danny, as you pointed out, I will not be buying there but thank you for that information. Yahoo Finance's Dani Romero.