A real estate sales sign sits outside of a house for sale in Phoenix, Arizona
A home for sale in Phoenix REUTERS

Housing prices in the largest U.S. cities rose by 18.4% in October from a year earlier, continuing the market's boom since the start of the COVID-19 pandemic.

The S&P CoreLogic Case-Shiller 20-city home price index released on Tuesday showed the October rise was lower than the 19.1% gain seen in September's reading.

Of the cities examined, Phoenix saw the highest growth with a 32.3% increase in prices, followed by Tampa and Miami at 28.1% and 25.7%, respectively.

Every region across the U.S. saw double-digit increases, but the lowest were recorded in the Midwest with Chicago and Minneapolis only experiencing an 11.5% increase in prices.

Craig J. Lazzara, managing director at S&P Dow Jones Indices, said that October’s increase ranked in the "top quintile of historical experience" for 19 cities on the list and in the top decile for 17 of them, a sign of the market's continued strength in the face of the pandemic.

He suggested that the regional breakdown in price hikes may have been influenced by the pandemic itself, but added more research needs to be done in order to determine this.

“We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic,” Lazzara said in a press release that detailed S&P’s findings. “More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred over the next several years, or reflects a more permanent secular change."

The U.S. housing market has been volatile throughout the COVID-19 pandemic. Costs for homes skyrocketed in the last year, owing to higher prices for building materials, a sector-wide labor shortage and inadequate supply to keep up with demand.

Homebuilders have attempted to step up construction to address the issue, but it remains an ongoing process as inventory lags far behind demand.