March Saw a 20.6% Increase in Home Prices

The housing market is continuing to show no sign of easing. Home prices continued their upward spiral in March, rising 20% annually according to the S&P CoreLogic Case Shiller Index released on Tuesday.

The cost of living has been on an upswing, with prices increasing in most cities across the country. Tampa reported the highest one-year increase at 34.8%, while Phoenix saw a 32.4% spike over last year’s numbers – followed closely by Miami which recorded 32%, 17 out 20 metropolises report higher costs now than they did just months ago.

“Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer. The strength of the composite indices suggests very broad strength in the housing market, which we continue to observe.” Said Craig JLazzara from S&P DJI . “All 20 cities saw double-digit price increases for the 12 months ended in March, and price growth in 17 cities accelerated relative to February’s report. March’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them,” he added.

The housing market is cooling as prices continue to rise and mortgage rates stay high. New home sales have tumbled 16.6%, leaving the pace down nearly 27% from last year’s numbers; contracts for pending transactions also showed little change over last month’s rate at 3.9%.

Inventory dwindles and now mortgage rates have broken 5% for a 30-year fixed-rate loan. The Federal Reserve is trying hard  to stabilize inflation with its aggressive tightening policy of monetary inflation control.

“The Federal Reserve is trying to tame inflation and slow demand, leading to a slight normalizing of the housing market, but the lack of supply against robust demographic demand will keep price appreciation elevated, so don’t expect a decline in prices anytime soon,” said chief economist at title insurer First American, Mark Fleming.

Home prices are going up at a record-breaking pace, with homes that are being marketed under current market conditions in the South, led by Florida. “Homes that are going pending….(final sales)….. are doing so at the quickest pace on record and the share of homes selling above their asking price is at a record for the spring season,” says Zillow economic data analyst Dan Handy.

Advertisement

“However, the market may be nearing an inflection point when it comes to price growth,” Handy added. “Mortgage costs are more than 50% higher than they were a year ago and prospective buyers will likely start to rethink what they can afford. Sellers may already be responding, with the rate of price cuts now on the rise, to meet buyers where they are. Price growth will likely begin to come back towards earth as many buyers are priced out and inventory rises.”