A sign is posted in front of new homes for sale at Hamilton Cottages on September 24, 2020 in Novato, California.
Justin Sullivan | Getty Images

There are signs that price growth could be cooling off in the otherwise red-hot housing market.

Prices rose 19.8% year over year in August, which was the same as the previous month, according to the S&P CoreLogic Case-Shiller Indices. That is the first time the annual gain hasn’t increased since early 2020.

The 10-city composite annual increase was 18.6%, down from 19.2% in July. The 20-city composite rose 19.7% year-over-year, down from 20% in the previous month. Prices in all cities covered are at an all-time high.

“We have previously suggested that the strength in the U.S. housing market is being driven in part by a reaction to the Covid pandemic, as potential buyers move from urban apartments to suburban homes,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI. “August data also suggest that the growth in housing prices, while still very strong, may be beginning to decelerate.”

Phoenix, San Diego, and Tampa saw the highest year-over-year gains among the 20 cities in August. Phoenix led the way with a 33.3% year-over-year price increase, followed by San Diego with a 26.2% increase and Tampa with a 25.9% increase.

Eight of the 20 cities reported higher price increases in the year ending August 2021 versus the year ending July 2021.

Price gains were partly fueled by a drop in mortgage rates in July and August. The average rate on the popular 30-year fixed loan fell below 3% in July and stayed there until mid-September. It then began to rise sharply and is now around 3.25%, according to Mortgage News Daily. Higher interest rates could take some of the heat out of home prices in the coming months.

Home prices, however, are unlikely to cool significantly, as both homebuyer demand and investor demand are still high. The supply of homes for sale, especially at the lower end of the market, remains extremely lean. Some new supply did come on over the summer, but it is falling yet again.

“Persistently strong demand among traditional homebuyers has been amplified by an increase in demand among investors this summer,” said Selma Hepp, deputy chief economist at CoreLogic. “While strong home price appreciation rates are narrowing the pool of buyers, particularly first-time buyers, the depth of the supply and demand imbalance and robust demand among higher-income earners will continue to push prices higher.”

Read More

In this article

Jack Dorsey, CEO of Twitter and co-founder & CEO of Square, speaks during the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021.
Marco Bello | AFP | Getty Images

Twitter co-founder Jack Dorsey weighed in on escalating inflation in the U.S., saying things are going to get considerably worse.

“Hyperinflation is going to change everything,” Dorsey tweeted Friday night. “It’s happening.”

The tweet comes with consumer price inflation running near a 30-year high in the U.S. and growing concern that the problem could be worse that policymakers have anticipated.

On Friday, Federal Reserve Chairman Jerome Powell acknowledged that inflation pressures “are likely to last longer than previously expected,” noting that they could run “well into next year.” The central bank leader added that he expects the Fed soon to begin pulling back on the extraordinary measures it has provided to help the economy that critics say have stoked the inflation run.

In addition to overseeing a social media platform that has 206 million active daily users, Dorsey is a strong bitcoin advocate. He has said that Square, the debit and credit card processing platform that Dorsey co-founded, is looking at getting into mining the cryptocurrency. Square also owns some bitcoin and facilitates trading in it.

Responding to user comments, Dorsey added Friday that he sees the inflation problem escalating around the globe. “It will happen in the US soon, and so the world,” he tweeted. Dorsey is currently both the CEO of Twitter and Square.

It’s one thing to call for faster inflation, but it may be surprising to some that Dorsey used the word hyperinflation, a condition of rapidly rising prices that can ruin currencies and bring down whole economies.

Billionaire investor Paul Tudor Jones and others have called for a period of rising inflation. Jones told CNBC earlier in the week that he owns some bitcoin and sees it as a good inflation hedge.

“Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment,” Jones said Wednesday.

But most of the major investors have not gone so far as to call for hyperinflation like Dorsey.

Read More