Housing Market

Home prices post largest gain in more than a year: S&P 

Price appreciation continues to defy expectations in the face of high mortgage rates and declining affordability

Home prices were near an all-time high in February. The S&P CoreLogic Case-Shiller U.S. National Home Price Index posted a 6.4% annual gain in February, up from a 6% gain in January, according to the newest report released Tuesday.

It was the largest annualized increase recorded since November 2022. On an annual basis, the 10-city composite index grew by 8%, up from 7.4% the previous month. The 20-city composite posted a year-over-year gain of 7.3%, up from 6.6% the previous month. 

On a monthly basis, the national index posted a seasonally adjusted increase of 0.4%, while the 20-city and 10-city composites each posted gains of 0.6%. 

“Following last year’s decline, U.S. home prices are at or near all-time highs,” Brian D. Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement. “Our National Composite rose by 6.4% in February, the fastest annual rate since November 2022. Our 10- and 20-City Composite indices are currently at all-time highs. 

“For the third consecutive month, all cities reported increases in annual prices, with four currently at all-time highs: San Diego, Los Angeles, Washington, D.C., and New York. On a seasonal adjusted basis, our National, 10- and 20- City Composite indices continue to break through previous all-time highs set last year.”

This month’s index release measured repeat sales data from December, January and February. Over the three-month moving average, mortgage rates dipped to 6.6%, then climbed back toward 7%. 

For-sale inventory increased 14.8% year over year in February, according to Realtor.com, but remained nearly 40% lower than pre-pandemic levels, which prevented home prices from easing. Meanwhile, the National Association of Realtors reported that existing home sales increased by 9.5% from January to February as buyers had more inventory to choose from, despite high prices and mortgage rates. 

Markets in the Midwest and Northeast regions posted some of the fastest-growing home prices, while Southern markets saw slower price growth.

San Diego (11.4%), Chicago (8.9%) and Detroit (8.9%) posted the biggest year-over-year price gains among the 20 cities tracked by S&P. Meanwhile, Portland, Oregon, saw the slowest growth with a yearly price gain of 2.2% in February.

“As with many economic indicators, the road to normalizing housing markets remains windy,“ CoreLogic chief economist Selma Hepp said in a statement. “While home sales and inventories are improving over last year’s bottom, higher mortgage rates continue to challenge affordability and keep many potential buyers on the sidelines.

“Still, given the persistent imbalance between buyers and sellers, home price growth remains solid and monthly gains march higher despite slowing of annual acceleration which simply reflects comparison with particularly strong gains in spring of 2023.”

This story was updated to include comments from CoreLogic chief economist Selma Hepp.

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