State-by-State: Housing Prices

  • The US Housing Price Index (seasonally adjusted) in the 12 months through November 2020 was up 7.2% compared to the prior year. Housing Prices are rising in all 50 states.
  • Mortgage rates reached a near 50-year low in December, and low existing home inventories (down 21.5% from the fourth quarter of 2019) are driving upward pressure on Prices.
  • Homebuyers choosing to move out of cities and into more desirable suburbs are contributing to the pace of rise for Housing Prices in more scenic states.
  • Quarterly Prices in Tennessee, Utah, Washington, Arizona, and Idaho are all rising at double-digit rates relative to year-ago levels. Idaho, up 14.4% from one year ago, leads the pack.

Reader's Forum

I’m comparing your forecast for GDP to those of other firms, and I’m noticing the growth rates in your forecast are lower. Why is that?

Eric Post, Senior Economist at ITR Economics™, answers:

Thank you for the great question! You are noticing a difference because investment banks and other organizations that put out economic forecasts tend to follow the lead of the Bureau of Economic Analysis and annualize the quarterly Real GDP data. In contrast, we at ITR Economics leave the data as is and quote the quarterly growth rates as released. You are noticing a difference between our GDP forecast and other firms’ forecasts because we are essentially using different metrics.

The reason we do not annualize the quarterly Real GDP data is best illustrated by the third quarter of 2020, when Real GDP grew 7.5% from the prior quarter as the economy reopened. Others reported this as an increase of 33.4%; that figure is the 7.5% quarterly growth rate as applied for four consecutive quarters and reported as a yearly – or “annualized” – rate (see formula below). However, clearly Real GDP will not grow at 7.5% for four consecutive quarters! Indeed, fourth-quarter Real GDP increased a normal 1.0% from the third quarter. In our view, the annualized numbers can be misleading, which is why we quote the quarterly growth rate, letting the unadjusted quarterly data speak for itself.

The following formula, with an exponent of four to account for the four quarters in one year, is how the 7.5% quarterly growth rate becomes the 33.4% annualized rate: (1 + 0.075)^4 – 1

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