At a time when existing home inventory is near an all-time low, Phoenix home prices continue to rise — and homebuilders simply can’t keep up with demand.

Article originally posted here.

Once again, Phoenix topped the nation in home price growth, with year-over-year price increases of 9.9% in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index released Tuesday. That compares with a 5.7% annual gain in August nationwide, up from 4.8% the previous month.

Supply of inventory has remained below two months since June — hitting an all-time low of 1.26 months supply in July, said Thomas Brophy, national director of research and analytics for Colliers International.

As of September, months supply of inventory in metro Phoenix is at 1.48, he said.

“The tremendous near-term supply constraints, as well as rapidly increasing lumber costs — up 91% year over year — and historically low interest rates, will continue to keep home prices elevated,” Brophy said.

The Covid-19 lockdown is causing people in high density, expensive gateway markets to leave their homes and head for the Valley, he said.

“As a result, for metros like Phoenix, both single-family home sales and mulitfamily rents and occupancies have continued to perform exceptionally well,” Brophy said.

Selma Hepp, deputy chief economist for CoreLogic Inc. (NYSE: CLGX), said those low inventories are continuing to drive strong price increases in metro Phoenix.

“The combination of traditional demand along with continued interest from investor buyers has led price growth in the lower one third of the market — as much as 12%,” she said. “Also, with many of the out-of-state buyers coming from California where median home prices are higher, they could be more wiling to pay a higher price on Phoenix homes.”