The October increase in home prices in the United States was due to the continuing boom in the housing market following last year’s coronavirus crisis.

S&P CoreLogic CaseShiller 20-city home prices index showed a 18.4% increase in October compared to a year ago. Although the gain was slightly slower than September’s 19.1 percent increase year-over-year, it was still in line with economists’ expectations.

All 20 cities saw double-digit increases in annual growth. Phoenix (32.3 percent), Tampa (28.1%) and Miami (25.7%) were the hottest markets. The smallest increase was in Minneapolis and Chicago, which were 11.5 percent.

Rock-bottom mortgage rates and a limited supply have helped to make the housing market strong. This is in addition to the pent-up demand from those who were affected by the pandemic last year. Many Americans are tired of being stuck at home due to the pandemic and want to move up from their apartments to larger houses or homes.

Danielle Hale (chief economist at stated that although home price growth will slow in the coming year, it will continue to rise. Buyers will be creative as housing costs consume a greater portion of the homebuyers’ paycheques. Many will use the flexibility offered by their workplace to relocate to the suburbs, where they can find a lower cost per square foot than in nearby cities.

Craig Lazzara (managing director, S&P Dow Jones Indices), said that it is not clear if this shift is permanent or an aberration.

Lazzara stated that “we have previously suggested the strength of the US housing market in part due to a change in locatal preferences as households respond to the COVID panademic.” To determine if this demand surge is an acceleration in purchases over the next few years or reflects a more lasting secular change, we will need to collect more data.

Mortgage rates dropped to 3.05 percent last week for the 30-year benchmark fixed-rate mortgage and 2.66 percent for a 15-year fixed rate home loan. Credit markets are more worried about Omicron variant depressing growth than the highest inflation rates for nearly 40 years. This is evident by the persistently low rates.

Last week, the National Association of Realtors reported that sales of previously occupied properties rose for the third consecutive month in November to an annual adjusted rate of 6.46 Million.