Housing prices in the US recorded the biggest increase in two years in August because lower mortgage interest rates stimulated demand for home purchases, while housing supply tended to be tight.

The housing price index for the top 20 metropolitan areas compiled by S&P CoreLogic Case-Shiller rose 5.2% year on year, better than the expectations of all analysts in the Bloomberg survey, and recorded the biggest year-on-year increase since August 2018.

Americans who have not lost their jobs during the COVID-19 pandemic have moved to the suburbs to expand their living space, and demand for home purchases has surged. Also, since the company allows employees to continue working from home, second-hand housing sales are also fast. In some regions, bidding wars are becoming more common.

“Housing prices are rising as demand soars and supply is still in short supply,” said Mark Vitner, senior economist at Wells Fargo Securities. “People are staying at home more and more, so they're less inclined to sell now.”

The report shows that the biggest increase was in Phoenix, where housing prices rose 9.9%, followed by Seattle, which rose 8.5% year over year, and San Diego, which rose 7.6%.

Zillow economist Matthew Speakman called “an astonishing rise in housing prices,” which deviates from the usual seasonal pattern.

“Although the overall economic development path may most directly depend on the development of the epidemic and the political situation in the coming months, recent trends indicate that the property market, which has withstood all the challenges related to the pandemic so far, will continue to be strong in the coming months,” Speakman said in a statement.