A Redfin sign in front of a home for sale in Atlanta, Georgia on Sunday, November 13, 2022.
Élie Nouvelage | Bloomberg | Getty Images
High demand and tight supply continue to drive up home values, even as mortgage rates rise again.
Home prices in February jumped 6.4% year over year, another increase following the previous month’s 6% annual gain, according to the S&P CoreLogic Case-Shiller National Home Price Index released Tuesday. This is the fastest price growth rate since November 2022.
The 10-city composite rose 8%, compared to a 7.4% increase the month before. The 20-city composite index posted an annual gain of 7.3%, up from a 6.6% advance in January.
“After last year’s decline, U.S. housing prices are at or near all-time highs,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices. “For the third month in a row, all cities reported an increase in annual prices, with four currently at all-time highs: San Diego, Los Angeles, Washington, DC and New York.”
Prices in San Diego saw the largest increase among the 20 cities in the index, up 11.4% from February 2023. Chicago and Detroit reported annual increases of 8.9%. Portland, Oregon had the smallest increase in the index, just 2.2%.
“The Northeast region, which includes Boston, New York and Washington, DC, ranks as the best performing market over the past half year. While remote work benefited smaller (and sunnier) markets during the first part of the decade, coming back to our office could contribute to the outperformance of large metro markets in the Northeast,” according to Luke.
“Since the previous price peak in 2022, this is the second time that house prices have risen in the face of economic uncertainty. The first decline followed the start of the Federal Reserve’s hiking cycle. The second decline followed the peak in average mortgage rates. last October,” he added.
This index records prices on a three-month moving average, so they go back to December, when mortgage rates hit their recent lows. There were also strong expectations that the Federal Reserve would lower interest rates. This may have prompted buyers to take the plunge.
Since then, however, mortgage rates have jumped nearly a percentage point. Additionally, stubborn and persistent inflation has reduced expectations that the Fed will cut rates significantly this year.
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