House prices rose more than 20% year-on-year in March | CNN Business




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US home prices continued to soar in March as buyers rushed to lock in homes before the average mortgage rate hit 5%.

Home prices rose 20.6% in March from a year earlier, even faster than the 20% growth seen in February, according to the S&P CoreLogic Case-Shiller National Home Price Index. in the USA. This is the largest year-over-year price change in over 35 years of data.

Cities in the Sun Belt again saw the biggest price increases among the 20 U.S. cities tracked by the index. But for the first time in nearly three years, the city with the fastest growing house prices was not Phoenix.

Prices in Tampa, Florida rose the most, rising 34.8% from a year earlier; Phoenix was up 32.4% from a year ago and Miami saw a 32% increase. Seventeen of the 20 cities reported higher price increases in the year ending March 2022 compared to the year ending February 2022.

Prices were highest in the south and southeast, but each region continued to post big gains.

With mortgage rates rising and Federal Reserve interest rates rising, the anticipated deceleration in the housing market did not occur in March, said Craig J. Lazzara, managing director of S&P Dow Jones Indices.

“The macroeconomic environment may not support the extraordinary growth in house prices for much longer,” Lazzara said. “While it can be safely predicted that price gains will begin to slow, the timing of the deceleration is a tougher choice.”

Another sharp rise in home prices in March indicates buyers felt pressure to bid competitively on the few homes available for sale, said Danielle Hale, chief economist for Realtor.com.

“Homebuyers were motivated to lock in a mortgage rate before price increases, rising rates, or a combination of the two kicked in their aspirations,” Hale said.

However, a lot has happened since March. While mortgage rates jumped nearly a full percentage point in March, average rates on a 30-year fixed-rate mortgage only hit 5% in April. Since then, the prices climbed to 5.3%, but retreated in recent weeks, according to Freddie Mac. In addition, the Fed raised its benchmark interest rate twice – including the biggest rate hike since 2000 – and the double whammy of inflation and the war in Ukraine took greater burden on the economy.

More recent housing data suggests the market has changed since March.

“We’ve seen a real estate refresh that has more sellers listing homes, resulting in a greater availability of homes for sale compared to the same time last year,” Hale said. “Meanwhile, mortgage rates have stabilized, but remain near 13-year highs.”

But above all, she says, recent new and existing home sales data indicate that buyers are increasingly unable or unwilling to purchase a home under these conditions.

“As buyer confidence weakens and weighs on demand, housing markets will rebalance, eventually moving away from the heavy advantage that recent home sellers have enjoyed,” Hale said. “This will initially mean fewer home sales, which should lessen the bidding wars and concessions buyers make to sweeten offers.”


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