US Home Prices Also Rose... Increased by Over 8500 Trillion Won Since COVID-19

Fed May Raise Interest Rates This Year... NTY Says "Price Increase Eases but Does Not Lead to Decline"

Jerome Powell, Chair of the U.S. Federal Reserve (Fed), has signaled an interest rate hike.
[Image source=Yonhap News]

[Asia Economy Reporter Kang Wooseok] It has been confirmed that U.S. home prices have increased by more than $6 trillion over the past two years.

According to data from the U.S. Federal Reserve (Fed), the housing wealth of homeowners in the U.S. rose from $19.5121 trillion (24,706 trillion KRW) in Q4 2019, just before the outbreak of COVID-19, to $26.363 trillion (33,385 trillion KRW) in Q4 last year, an increase of $6.8508 trillion (approximately 8,670 trillion KRW).

The New York Times (NYT) reported that most of this asset increase was not due to new home supply or value increases from remodeling existing homes, but rather from a surge in home prices caused by excessive demand and supply shortages during the pandemic.

According to foreign media, the Standard & Poor's (S&P) Case-Shiller Home Price Index, a key indicator of U.S. home prices, rose 18.8% annually last year. This is the highest annual increase since the related statistics began in 1987.

The NYT stated that while demand for housing increased due to low mortgage rates and the desire for more living space during the pandemic, new housing supply has not kept pace.

It also pointed out that although 65% of existing homeowners benefited from the rise in home prices, those without homes are facing a crisis.

The NYT further noted that inequality will intensify as baby boomers who already own homes and white households, whose homeownership rate is about 30% higher than that of Black households, disproportionately benefit from the rising home prices compared to the millennial generation who need to buy homes.

While recent interest rate hikes are expected to slow the pace of home price increases, they are not expected to lead to a decline in home prices.

Meanwhile, the Case-Shiller Home Price Index surged 19.8% in February this year compared to the same period last year, indicating that the upward trend in home prices continues this year as well.

The Fed’s acceleration of monetary tightening, including interest rate hikes this year, is also expected to stimulate home purchase demand before further rate increases.

This content was produced with the assistance of AI translation services.