America’s Finest City is just a hair’s breadth away from having the hottest real estate market in the country.

Home prices in the San Diego metro area rose 24.7% year on year in May, the S&P CoreLogic Case-Shiller indices reported Tuesday. Phoenix was the only metro to have a faster gain at 25.9%.

May was the largest annual increase in the index’s national average, 16.6%, in more than 30 years of history. While the month marked the biggest increase in the pandemic in San Diego, it’s still not a record high. In July 2004, prices increased by 33.4% over a period of 12 months.

“A month ago I described April’s performance as ‘truly extraordinary’ and this month I find myself running out of superlatives,” wrote Craig Lazzara, Managing Director and Global Head of Strategy. index investing at S&P Dow Jones Indices.

Experts continue to point to a perfect storm of reasons for the increases: national housing inventories are not keeping up with demand, rising wealth of stay-at-home workers, millennials entering homeownership and record mortgage rates. .

The interest rate for a 30-year fixed-rate mortgage was 2.96% in May, Freddie Mac said, down from 3.23% the year before. The rate is up from the December average of 2.68%, which was the lowest on record since 1971.

All 20 cities in the index saw faster increases in May than the previous month, which was already one of the strongest months in index history. Chicago, with an 11.1% gain, and Minneapolis, up 12.8%, saw the slowest increases.

San Diego’s 24.7% increase marks the 22nd month as California’s top market for fastest home appreciation. In May, prices rose 18.2% annually in San Francisco and 17% in Los Angeles.

Matthew Speakman, an economist with Zillow, wrote in his analysis of the report that the number of homes rose slightly in May, but that did little to dampen demand. He said the upward pressure on prices continues and is expected to remain so for the next few months.

“The sharp rise in prices appears to have depressed prices for some home buyers, particularly those looking to enter the market for the first time, and causing fatigue among potential buyers,” Speakman wrote.

He said if home inventory continues to rise, it will eventually slow price appreciation, but it will likely take some time. before it appears on the market.

The Case-Shiller indices take into account repeat sales of identical single-family homes – and are seasonally adjusted – over the years. The median price for a single-family home in San Diego County in May was $825,000, according to CoreLogic data provided by DQNews.

Selma Hepp, deputy chief economist at CoreLogic, said tighter lending standards and significant accumulated savings make the market look very different from the factors that led to the housing crash. She said the market is supported by an underlying consumer force.

Competition for homes appears to be mostly local, according to another housing report released this week. The National Association of Realtors said the number of purchases by foreign buyers fell 27% from April 2020 to March 2021, which was expected due to the COVID-19 pandemic. The top locations for foreign buyers were Florida (21%), California (16%) and Texas (9%).

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S&P CoreLogic Case-Shiller Indices

Annual increase by metropolitan area

Phoenix 25.9%

San Diego 24.7%

Seattle 23.4%

Dallas 18.5%

San Francisco 18.2%

Tampa 18.0%

Portland 17.5%

Boston 17.4%

Denver 17.4%

Los Angeles 17.0%

Charlotte 16.9%

Miami 16.6%

Vegas 15.5%

New York 15.2%

Detroit 15.1%

Washington 14.8%

Atlanta 14.3%

Cleveland 13.6%

Minneapolis 12.8%

Chicago 11.1%