US home prices continued to surge higher in February.
Prices rose 19.8% year-over-year in February, an even higher rate than the 19.2% growth seen in January, according to the S&P CoreLogic Case-Shiller US National Home Price Index.
Phoenix, Tampa and Miami reported the highest year-over-year gains among the 20 US cities tracked by the index. Phoenix led the way for the 33rd consecutive month with home prices rising 32.9% from the year before. It was followed by Tampa and Miami, which saw 32.6% and 29.7% gains, respectively.
All 20 cities reported price increases in the year ending February 2022. In January, 16 cities saw year-over-year growth. Prices were strongest in the South and Southeast, but every region continued to show big gains.
“US home prices continued to advance at a very rapid pace in February,” said Craig J. Lazzara, managing director at S&P Dow Jones Indices. “That level of price growth suggests broad strength in the housing market, which is exactly what we continue to observe.”
Although Lazarra noted that rising inflation, further interest rate hikes by the Federal Reserve and rising mortgage rates may soon take the momentum out of the housing market.
The imbalance between strong demand from prospective buyers and insufficient supply of available homes has also been pushing home prices higher, said George Ratiu, manager of economic research for Realtor.com
“Today’s S&P Case-Shiller Index highlights a housing market experiencing a renewed sense of urgency in February, as buyers worked through a small number of homes for sale in an effort to get ahead of surging mortgage rates,” he said.
While inventory has increased a bit since February, according to the National Association of Realtors, there are several other changes that have taken place since then, too.
Real estate markets have seen supply-chain disruptions from the war in Ukraine. Mortgage rates have also been rising fast, climbing above 5% for the first time since 2010. In addition, a strong labor market is driving wages and inflation higher, he said.
“For buyers, the jumps in prices and mortgage rates translated into sticker shock,” said Ratiu.
For a median-priced home financed with a 30-year loan, the monthly payment is $550 higher than a year ago, he said.
But with more inventory expected to come onto the market this spring and rising mortgage rates, housing analysts are expecting to see a cool-off in demand.
“Many buyers are deciding to take a step back and re-evaluate their budgets and timelines,” said Ratiu.