(CNN) – U.S. home prices continued to rise in March as buyers rushed to secure ahead of the average home mortgage rate 5% hit.
According to the S&P CoreLogic Case-Shiller US National Home Price Index, home prices rose 20.6% year over year in March, an even stronger rate than February’s 20% increase. It was the largest year-over-year price change in more than 35 years of data.
Of the 20 US cities covered by the index, cities in the Sun Belt again saw the largest price increases. But for the first time in almost three years, Phoenix wasn’t the city with the fastest rise in home prices.
Prices in Tampa, Fla. rose the most, rising 34.8% year over year; Phoenix was up 32.4% year over year and Miami was up 32%. Seventeen of the 20 cities reported higher price increases in the year ended March 2022 than in the year ended February 2022.
Prices were strongest in the South and Southeast, but all regions continued to post big gains.
With mortgage rates rising and the Federal Reserve raising rates, the expected housing market slowdown did not materialize in March, said Craig J. Lazzara, managing director at S&P Dow Jones Indices.
“The macroeconomic environment may not support exceptional home price growth much longer,” Lazzara said. “While it is safe to predict that gains will slow, timing the slowdown is a more difficult decision.”
Another sharp rise in home prices in March suggests buyers were feeling pressure to bid competitively on the few properties for sale, said Danielle Hale, chief economist at Realtor.com.
“Home shoppers were motivated to secure a mortgage rate before price increases, rising interest rates, or a combination of both could slap their aspirations in the face,” Hale said.
But a lot has happened since March. While mortgage rates rose almost a full percentage point in March, the average interest rate on a 30-year fixed-rate mortgage only reached 5% in April. Since then prices have risen up to 5.3%, but have has retired in recent weeks, according to Freddie Mac. additionally The Fed has raised interest rates twice – including the biggest rate hike since 2000 – and the double blow of inflation and war in Ukraine has struck a greater burden on the economy.
Recent real estate data suggests the market has shifted since March.
“We have observed a real estate update with more sellers listing homes, resulting in greater availability of homes for sale compared to this time last year,” Hale said. “Mortgage rates have since stabilized but remain near 13-year highs.”
But most of all she said youngest Sales data for both new build and existing homes signal that buyers are increasingly unable or unwilling to buy a home in these conditions.
“As buyer confidence wanes and demand weighs, housing markets will rebalance and eventually move away from the huge advantage that past home sellers have enjoyed,” Hale said. “This will initially mean fewer home sales, which should reduce bidding wars and concessions buyers are making to sweeten deals.”
The CNN Wire
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