<p><img src="https://static6.businessinsider.com/image/603513a2bed5c50011a2c047-2400/2020-06-22t154117z_2_lynxmpeg5l18u_rtroptp_4_usa-housing-affordability.jpg" border="0" alt="FILE PHOTO: Homes are seen for sale in the northwest area of Portland, Oregon March 20, 2014. REUTERS/Steve Dipaola " data-mce-source="Reuters" data-mce-caption="Homes are seen for sale in the northwest area of Portland"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>US home prices surged through the end of 2020 as record-low mortgage rates kept demand at elevated levels, and <a href="https://www.businessinsider.com/us-home-starts-gain-housing-market-boom-construction-economic-recovery-2021-1">a general inventory shortage</a> propped up prices.</p><p>The S&P CoreLogic Case-Shiller US National Home Price Index posted a 10.4% annualized increase in December, according to a Tuesday <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20210223-1321360/1321360_cshomeprice-release-0223.pdf">press release</a>. The gain follows a 9.4% annualized climb in November and marks the biggest single-month leap in seven years seen by the index, a leading national dataset.</p><p>S&P Dow Jones Indices' 10-City Composite index rose to an annualized gain of 9.8% from 8.9%. The 20-City Composite rose to a 10.1% year-over-year jump from November's 9.2% reading.</p><p>Phoenix, Seattle, and San Diego saw the biggest home-price increases among the 19 cities surveyed in December.</p><p>"These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes," Craig Lazzara, managing director and global head of index investment strategy at S&P DJI, said in a statement. "This may indicate a secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway."</p><p>The housing market was one of the few pockets of the economy to see explosive growth through 2020 as new buyers rushed to scoop up dwindling inventory. The Federal Reserve's decision to drop interest rates to nearly zero in March 2020 dragged on mortgage rates and, along with <a href="https://www.businessinsider.com/how-2020-broke-the-housing-market-inventory-could-run-out-2020-9">the onset of the work-from-home era</a>, sparked a homebuying spree. The surging pace of sales for new and existing homes quickly left contractors struggling to keep up.</p><p>Though the Tuesday release shows the housing market's rally set to continue into 2021, momentum has wavered in recent weeks. After the 30-year fixed mortgage rate <a href="https://www.businessinsider.com/30-year-mortgage-rate-fell-to-record-low-2020-7">sank below 3%</a> for the first ever in mid-2020 and stayed there for months, it turned higher in mid-January, signaling the buying frenzy could soon cool.</p><p>This shift was one of <a href="https://markets.businessinsider.com/news/stocks/stock-markets-today-us-futures-ease-as-inflation-fears-pick-up-2021-2-1030106684">several January and February datapoints</a> indicating investors are growing wary of inflation leaping higher as the economy recovers. Rising inflation would likely correspond with rising mortgage rates and, in turn, slow home-price growth.</p><p>Still, the US housing market will likely thrive through 2021 as more forthcoming stimulus bolsters homebuying activity, Fitch analysts led by Suzanne Mistretta said in a February 16 note. The firm said it expects prices and mortgage volume to continue growing in 2021 due to consistently low borrowing costs and lasting supply constraints. Demand is likely to outpace supply until the effects of the coronavirus pandemic fade, the analysts said. In other words, there won't be enough homes to go around for a while yet.</p><p>Market health could waver should job losses creep into previously unaffected industries and hit higher-income workers, the team added.</p><p><a href="https://www.businessinsider.com/home-prices-case-shiller-index-housing-market-december-real-estate-2021-2#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/how-parasite-delivered-one-of-the-best-twists-in-cinema-2020-2">What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence</a></p> Click here to read full news..