Housing prices set another record for highest year-over-year price growth

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The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.3 percent from November to December on a non-seasonally adjusted basis.

Year-over-year, the Wasatch Front Consumer Price Index has grown 5.4 percent, which is tied for the largest year-over-year price increase since Zions Bank began tracking the Wasatch Front Price Index in July 2010. Nationally, the Consumer Price index has increased 1.9 percent since December 2017.

Wasatch Front housing prices rose 0.4 percent from last month’s Index, which is unusual because housing prices typically dip in December. Even more notable is that, for the second consecutive month, housing prices set another record for year-over-year price growth. From December 2017 to December 2018, Utah housing prices increased by 9.4 percent — the biggest jump since the beginning of the Index in 2010.

Housing prices are the leading factor for overall price growth since November 2018 and since December 2017.  Food-away-from-home and utilities prices are the next largest factors in the overall price increase from November. Transportation and medical care price growth are secondary drivers of the year-over-year price changes.

In terms of job growth, construction has been one of the fastest growing industries for years, according to the Utah Department of Workforce Services. Even so, Utah’s population growth has been so rapid that supply has still fallen below demand.

“The rapid price growth we’re seeing in housing will stay strong until the supply of newly built houses overtakes both pent-up and near-term demand,” said Scott Anderson, Zions Bank president and CEO. “Thankfully, our strong job market is encouraging the construction industry to keep investing in residential housing units here in Utah.”

The Kem C. Gardner Policy Institute’s database on construction in Utah shows that permits for 20,686 residential units were released from January to October 2018, an increase of 4.4 percent from the year before.

“With the one-to-two-year lead time that it takes to complete housing units, I anticipate that housing supply will catch up to demand within 12-18 months,” said Randy Shumway, chairman and partner of Cicero Group. “That means we’ll continue to see residential unit values be strong and even increase in the near term, but that construction will finally be at pace with Utah’s population growth in about year.”

Analysis and data collection for the Zions Bank CPI and the Zions Bank Consumer Attitude Index are provided by Cicero Group, a premier market research firm based in Salt Lake City.