Home Prices Soared 20% In March Mirroring Interest Rate Hike

Home prices in the U.S. surged by 20.6% in March from the same month last year as mortgage rates also jumped and averaged 5%. The year-over-year price increase is the highest in over 35 years data has been recorded, according to the S&P CoreLogic Case-Shiller US National Home Price Index.

Home Prices Soar

The Case-Shiller 10-city composite increased by 19.5% in March, from 18.7% in February. Also, the 20-city composite jumped by 21.2% year-over-year. Tampa, Florida, saw the biggest increase (34.8%), knocking Phoenix (32.4%) from the first place with Miami trailing with a 32% increase.

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Craig Lazzara, managing director at S&P DJI, was quoted as saying on CNBC, “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.”

“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.”

On the lower end, the cities with the slightest increases were Minneapolis (up 12.4%), Washington (up 12.9%), and Chicago (up 13%).

Trend

Lazzara added, “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.”

Home sales have tailed off in the last few months while demand has skyrocketed. However, sellers will want to jump on the bandwagon as they do not want to miss the sizzling market and the high prices.

“Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call.”

Danielle Hale, chief economist for Realtor.com asserts that home buyers were driven to lock in a mortgage rate before price increases, rising rates, or a combination of the two provided a big blow to their ambitions.

“We've observed a real estate refresh that has more sellers listing homes, leading to greater availability of homes for sale compared to this time last year. Meanwhile, mortgage rates have steadied, but remain near the highest levels in 13 years,” Hale told CNN Business.