Home Prices Surge 20.6% In Biggest Spike This Century—And Experts Say It’s Unclear When They’ll Drop
Though rising interest rates have started to temper demand in the booming housing market, home prices still skyrocketed at the highest rate in 35 years in March, according to industry data released Tuesday, and experts say it’s still too tough to tell when hot prices will begin to cool.
Home prices across the country skyrocketed 20.6% in March on an annual basis, climbing 2.6% from one month earlier, when prices surged 20% year over year, according to the closely watched S&P CoreLogic Case-Shiller Indices.
Prices in the nation’s largest cities swelled even more rapidly, with the Case-Shiller 20-City Index, which measures prices in cities such as New York, Los Angeles and San Francisco, climbing 21.2%.
Tampa, Phoenix, and Miami reported the highest year-over-year gains among the 20 cities in March, with Tampa home prices jumping 34.8% year over year to outseat Phoenix prices, which posted a 32.4% increase and led gains nationwide for nearly three years.
“Those of us who have been anticipating a deceleration in U.S. home prices will have to wait at least a month longer,” S&P DJI managing director Craig Lazzara said in a Tuesday statement, pointing out that prices nationwide and in 20 of the largest metropolitan areas grew at the quickest rate in more than 35 years.
“Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call,” Lazzara says. “Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer. “
Historically high savings rates, government stimulus measures, low supply and interest rates helped ignite a home buying frenzy during the pandemic, but signs of a slowdown have emerged as the Fed embarks on its most aggressive interest-rate hiking cycle in two decades. Last week, new data showed pending home sales slid for the sixth consecutive month in April to the lowest level in nearly a decade, while new home sales last month plunged nearly 17% from March.
Before the pandemic, home prices were rising at less than 4% on an annual basis.