Source: Statista

Low mortgage interest rates driving up prices, demand outstripping supply due to material shortages, increased competition by investors: The U.S. housing market is becoming increasingly inaccessible to regular people wanting to buy their own single-family home. As our chart based on data from the S&P CoreLogic Case-Shiller U.S. National Home Price Index shows, prices in this housing segment have reached an all-time high.

In December 2021, the index rose to 278.63 points, the highest since its inaugural year of 1987. This marks an increase of 178 percent since January 2000 and of roughly 19 percent since December 2020. The reasons for this are, as already hinted at, manifold. For example, a recent survey conducted by the National Alliance of Home Builders showed that 96 percent of participants saw high prices for building materials as a significant problem in 2021, with 91 percent claiming that this issue will continue throughout 2022.

This, in turn, leads to a backlog in construction, which mostly affects single-family units. According to data from the U.S. Census Bureau, the number of houses in this segment that were authorized but hadn’t started construction yet stood at 152,000 in October 2021 alone, the highest figure since August 2006. Other factors in play include global and national investors flooding the market as well as the rise of iBuying, where companies use dedicated algorithms to estimate a house’s value and instantly buy it in cash, skirting mortgage issues and the majority of the market as a whole.

While pressure might ease on some fronts as the coronavirus pandemic becomes endemic in the next couple of years, the core problems will persist. “It’s not a bubble, it really is about the fundamentals,” said Jenny Schuetz, a housing researcher at the Brookings Institution, in an interview with The New York Times. “It really is about supply and demand — not enough houses, and huge numbers of people wanting homes.” This demand not only influences housing prices in general but the share of higher-cost single-family units as well. According to the U.S. Census Bureau, the average price for a family home stood at $391,900 in 2020, with the market share of houses selling for more than $400,000 amounting to 34 percent in that year.

Florian ZandtData Journalistflorian.zandt@statista.com