Home price growth continued to gain speed in early spring, as eager buyers tried to get in front of the mortgage rate surge. The S&P CoreLogic Case-Shiller Index posted a 19.8% increase in February, the second month of accelerated growth after a winter lull. This was the strongest February year-over-year increase since the beginning of the data series.
After a short respite, home price growth sped up in January. The S&P CoreLogic Case-Shiller Index registered a 19.2% increase after four months of slowing or flat growth. This was the strongest January year-over-year increase since the beginning of the data series.
Although home price gains are expected to slow in 2022 and average a little less than 10% growth for the year, the recent rapid acceleration in prices has led to overvaluations in some markets, therefore pushing up the risk of price decline in the year ahead.
After some signs of slowing home price growth, suggested by the seasonally adjusted deceleration in month-to-month gains, November monthly price growth re-accelerated again, indicating home buyers have not yet thrown in the towel.
In addition to elevated demand for owner-occupied and second homes since the onset of the pandemic, there has also been an increase in investor home purchases across the U.S. housing markets.
Despite some headwinds to the housing demand stemming from higher mortgage rates, affordability constraints and continued lack of supply, home price growth and home sales activity continued to track at record levels.