Annual rates of home price appreciation in metro Denver hit a new high in August of 21.5%, barely nudging past July’s prior record gain of 21.3%, according to the latest S&P CoreLogic Case-Shiller Home Price Index for Denver.
But August’s monthly change in the Denver home price index ran at half the monthly rate seen in July, 0.9% vs. 1.8%, a sign that future increases, while still strong, won’t be nearly as robust.
Denver’s annual gain came in ahead of the overall U.S. gain in home prices of 19.8%. But there too, monthly gains deaccelerated, falling from 1.7% in July to 1.2% in August.
“The U.S. housing market showed continuing strength in August 2021,” said Craig J. Lazzara, global head of index investment strategy at S&P DJI in comments accompanying the monthly report. “Every one of our city and composite indices stands at its all-time high, and year-over-year price growth continues to be very strong, although moderating somewhat from last month’s levels.”
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Lazzara said reactions to the pandemic are likely driving the strong rates of appreciation as urban apartment dwellers snap up suburban homes. What remains to be determined is whether those purchases represent demand that would have happened anyway over the next several years or mark a fundamental shift in the locations that buyers prefer. That second scenario would provide more support for future gains than the first one.
“August’s data are consistent with either explanation,” he said.
Phoenix had the strongest gains among the 20 metros tracked at 33.3%, followed by San Diego at 26.2% and Tampa at 25.9%.
“While demand remains strong and buyers are still generally paying more for homes than asking price, the slowing acceleration in home prices suggests that buyer fatigue is setting in, particularly among higher-priced homes where the acceleration in price growth from the previous month has been larger compared to low tier homes,” said Selma Hepp, deputy chief economist at CoreLogic, in comments on the index.