In this Sept. 3, 2019 file photo a sign rests in front of a newly constructed home, in Westwood, Mass. U.S. home prices rose in April for the eighth straight month, even as sales have stumbled, a sign the coronavirus outbreak has had little impact on real estate values. The S&P CoreLogic Case-Shiller 20-city home price index climbed 4% in April, the largest gain since December 2018, up from 3.9% in March. (AP Photo/Steven Senne, File)
WASHINGTON (AP) — U.S. home prices surged at the fastest pace in nearly seven years in December, fueled by low mortgage rates and Americans moving from crowded urban areas to houses in the suburbs.
The S&P CoreLogic Case-Shiller 20-city home price index, released Tuesday, climbed 10.1% in December from a year earlier. The year-end jump was the biggest since April 2014 and follows a strong 9.2% year-over-year gain in November.
Home prices climbed 14.4% in Phoenix , 13.6% in Seattle and 13% in Seattle in December. But prices rose all over. Chicago, which recorded the slowest price gain, saw a 7.7% uptick. Detroit was not included in the year-over-year figures because of record-keeping delays caused by the coronavirus pandemic.
“These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes," said Craig Lazzara, global head of index investment strategy at S&P DJI.XX. But he said it was unclear whether the trend would last.
Prices have also been pushed up by the limited supply of homes on the market. “With mortgage rates remaining relatively low and the wave of eager buyers continuing to swell, it’s unlikely that this competition for housing, and subsequent strong price appreciation, will meaningfully abate in the near future,'' said Matthew Speakman, economist at the real estate firm Zillow.
Homebound consumers are also sprucing up their living quarters. Commenting on a year-end surge of revenue and earnings at Home Depot, Neil Saunders of GlobalData calculated that Americans each spent the equivalent of $402 last year at the home-improvement giant.
The housing market has been resilient throughout the coronavirus pandemic, helped by rock-bottom rates on home loans. The average rate on the benchmark 30-year, fixed-rate mortgage ticked up to 2.81% last week from 2.73% but remains well below where it was a year earlier: 3.49%.
But the Commerce Department reported last Thursday that U.S. home construction fell 6% in January, dragged down by a 12.2% drop in construction of single-family homes; apartment construction climbed 16.2%. Still, applications for building permits, which typically signal where home building is headed, rose sharply in January.
20 "Past Their Prime" Stocks to Dump From Your Portfolio
Did you know the S&P 500 as we know it today does not look anything close to what it looked like 30 years ago? In 1987, IBM, Exxon, GE, Shell, AT&T, Merck, Du Pont, Philip Morris, Ford, and GM had the largest market caps on the S&P 500. ExxonMobil is the only company on that list to remain in the top 10 in 2017. Even 15 years ago, companies like Radio Shack, AOL, Yahoo, and Blockbuster were an important part of the S&P 500. Now, these companies no longer exist as public companies.
As the years go by, some companies lose their luster, and others rise to the top of the markets. We've already seen this in the last few decades, with tech companies surpassing industrial and energy companies that once dominated the S&P 500. It's hard to know what the next mega-trend will be that will knock Apple, Google, and Amazon off the top rankings of the S&P 500, but we know that companies won't stay on the S&P 500 forever.
We've identified 20 companies that are past their prime. They aren't at risk of a near-term delisting from the S&P 500, but they show negative earnings growth for the next several years. If you own any of these stocks, consider selling them now before they become the next Yahoo, Radio Shack, Blockbuster, AOL and are sold off for a fraction of their former value.
View the "20 "Past Their Prime" Stocks to Dump From Your Portfolio".