Home price growth accelerated in January as the supply of homes for sale fell to a new low.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the country, rose 19.2% for the year ended January, compared with a year-to-date gain of 18.9% the previous month.
Home prices rose at a record pace in 2021 and have continued to rise this year as demand for home purchases greatly outstrips the supply of homes for sale. Competition among buyers leads to bidding wars, and many homes are selling above their list price.
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The inventory of homes for sale fell in late January to its lowest level since the National Association of Realtors began tracking total inventory of existing homes in 1999.
Some buyers rushed to make purchases in January as mortgage rates began to rise, as real estate agents said they expected more rate hikes.
“Home prices continued to rise — even in the middle of a snowy January — as buyers rushed to find homes to beat rising mortgage rates,” said George Ratiu, senior economist and manager of economic research at Realtor.com. News Corp,
Parent company of The Wall Street Journal, operates Realtor.com.
These buyers guessed right. Mortgage rates have climbed further this month to their highest levels since 2019. The Federal Reserve raised its Federal Funds benchmark rate this month and announced further rate hikes. According to mortgage lender Freddie Mac, the average rate on 30-year fixed-rate mortgages rose to over 4.4% last week, up more than a percentage point from where it started the year.
The Case-Shiller Index, which measures repeat sales data, reports a two-month lag. Inventories rose in February but remained well below normal levels, NAR said. The median price for existing homes rose 15% year over year in February to $357,300, NAR said.
The combination of rising home prices and rising interest rates is making home ownership unaffordable for some buyers.
“We may soon see the impact of rising mortgage rates on house prices,” said Craig Lazzara, managing director at S&P Dow Jones Indices.
The Case-Shiller 10-City Index gained 17.5% in the year ended January, compared to a 17.1% gain in December. The 20-city index rose 19.1% after an annual gain of 18.6% in December. Price growth accelerated in 16 of the 20 cities.
Economists polled by the Wall Street Journal expected the 20-city index to rise 18.6%.
Phoenix posted the fastest home price growth in the country at 32.6% for the 32nd straight month, continuing its record streak at the top. Tampa, Florida saw the second-fastest growth at 30.8%.
A separate measurement of house price growth by the Federal Housing Finance Agency, also released Tuesday, showed house prices rose 18.2% in January from a year earlier.
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https://www.wsj.com/articles/home-price-growth-accelerated-in-january-11648558827?mod=pls_whats_news_us_business_f Home price growth accelerated in January