Home prices rose 20.6% in March from a year earlier, higher than the 20% growth in February, according to the S&P CoreLogic Case-Shiller National U.S. Home Price Index. This was the highest year-over-year price change in more than 35 years of data.
Sun Belt cities once again experienced the largest price increase of the 20 US cities tracked by the index. But for the first time in nearly three years, Phoenix wasn’t the city with the fastest growth in home prices.
Prices in Tampa, Florida were the highest, up 34.8% from the previous year. Phoenix stock is up 32.4% from a year ago and Miami saw a 32% increase. 17 of the 20 cities reported higher price increases in the year ending March 2022 than in the year ending February 2022.
Prices were strongest in the south and southeast, but each region continued to show significant gains.
With mortgage rates rising and the Federal Reserve raising interest rates, the expected slowdown in the housing market in March did not materialize, said Craig J. Lazzara, managing director at S&P Dow Jones Indices.
“The macroeconomic environment may not support extraordinary house price growth for much longer,” Lazarra said. “Although one can safely predict that price gains will begin to slow, the timing of the slowdown is much more challenging.”
Danielle Hill, chief economist at Realtor.com, said another sharp rise in home prices in March indicated that buyers felt pressure to bid competitively on the few homes available for sale.
“Home shoppers were eager to fix the mortgage rate before price increases, higher rates, or a combination of the two delivered a fatal blow to their aspirations,” Hill said.
The latest housing data indicates that the market has changed since March.
“We noticed a real estate update with more sellers listing homes, which has resulted in an increased availability of homes for sale compared to this time last year,” Hill said. Meanwhile, mortgage rates have stabilized, but remain near their highest levels in 13 years.
She said, but most importantly, Recently Sales data for both new homes and existing homes indicate that buyers are increasingly unable or unwilling to purchase a home under these conditions.
“With buyer confidence waning and demand waning, real estate markets will rebalance, eventually moving away from the huge advantage that new home sellers had,” Hill said. “This will initially mean lower home sales, which should reduce bidding wars and concessions from buyers to dampen offers.”