Yet another record was broken during 2021’s raging hot housing market, as uncanny price gains for single-family homes hit a 34-year high, according to the most recent S&P CoreLogic/Case-Shiller Indices.
The organization reported that home prices climbed 18.8% in December, maintaining their performance from the prior month while also capping off a record-setting year in 2021.
All 20 cities saw prices increase, according to experts who indicated that price tags in each market hit all-time highs in the final month of last year.
The 10-City Composite increased by 17.0%—up from 19.9% in November—while the 20-City Composite recorded an 18.6% price gain compared with the 18.3% seen in the previous month.
Phoenix led all cities for the 31st consecutive month with a 32.5% increase in home prices. Tampa and Miami followed in second and third place, with prices climbing by 29.4% and 27.3%, respectively.
The complete data for the 20 markets measured by S&P:
Atlanta, Ga.
December/November: 1.2%
Year-Over-Year: 21.9%
Boston, Mass.
December/November: 0.7%
Year-Over-Year: 13.4%
Charlotte, N.C.
December/November: 1.3%
Year-Over-Year: 23.8%
Chicago, Ill.
December/November: 0.6%
Year-Over-Year: 12.2%
Cleveland, Ohio
December/November: 0.6%
Year-Over-Year: 13.3%
Dallas, Texas
December/November: 1.7%
Year-Over-Year: 26.0%
Denver, Colo.
December/November: 1.1%
Year-Over-Year: 20.3%
Detroit, Mich.
December/November: 0.9%
Year-Over-Year: 14.5%
Las Vegas, Nev.
December/November: 1.0%
Year-Over-Year: 25.5%
Los Angeles, Calif.
December/November: 1.0%
Year-Over-Year: 19.3%
Miami, Fla.
December/November: 1.8%
Year-Over-Year: 27.3%
Minneapolis, Minn.
December/November: 0.4%
Year-Over-Year: 11.4%
New York, N.Y.
December/November: 1.1%
Year-Over-Year: 13.6%
Phoenix, Ariz.
December/November: 1.3%
Year-Over-Year: 32.5%
Portland, Ore.
December/November: 0.8%
Year-Over-Year: 17.9%
San Diego, Calif.
December/November: 1.8%
Year-Over-Year: 25.9%
San Francisco, Calif.
December/November: 0.8%
Year-Over-Year: 18.8%
Seattle, Wash.
December/November: 1.5%
Year-Over-Year: 23.9%
Tampa, Fla.
December/November: 1.6%
Year-Over-Year: 29.4%
Washington, D.C.
December/November: 0.4%
Year-Over-Year: 10.5%
What the Industry Is Saying:
“This month’s report covers December 2021 and, therefore, brings our reporting on calendar 2021 to a close. For the year, the National Composite Index recorded a gain of 18.8%. This is the highest calendar-year increase in 34 years of data and substantially ahead of 2020’s 10.4% gain.
We have noted that for the past several months, home prices have been rising at a very high but decelerating rate. The deceleration paused in December, as year-over-year changes in all three composite indices were slightly ahead of their November levels. December’s 18.8% gain for the National Composite is the fifth-highest reading in history.
We continue to see very strong growth at the city level. All 20 cities saw price increases in 2021, and prices in all 20 are at their all-time highs.
We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic. More data will be required to understand whether this demand surge simply represents an acceleration of purchases that would have occurred over the next several years rather than a more permanent secular change. In the short term, meanwhile, we should soon begin to see the impact of increasing mortgage rates on home prices.” — Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices
“Today’s S&P Case-Shiller Index data mirrors the strong December price gains seen in other price trackers such as median asking prices or median existing-home sales prices. Home prices rose by 18.8% annually in December in the nationwide index, on par with November’s gains. The 10- and 20-city indices increased by 17.0% and 18.6%, respectively, with each showing a slight pick-up in the pace of annual gains relative to the prior month. Sun Belt metros continue to see the biggest home price gains, with Phoenix (32.5%), Tampa (29.4%), and Miami (27.3%) topping the list. Even the metros at the bottom of the list are seeing double-digit home price gains.
Home prices continued to surpass expectations in December, but a marked change may be ahead for growth as rising mortgage rates eat into homebuyer purchasing power. Mortgage and other long-term rates, which had risen only gradually since August, abruptly began a steady climb in late December 2021 that continued through the most recent week. Indeed, while typical asking prices continue to accelerate, the pace of median sales price growth has slowed, signaling a potential gap between what buyers are willing and able to pay and what sellers are hoping to net. In fact, higher mortgage rates have added more than $200 to the monthly cost of a typical for-sale home since December 2020 – when rates were at all-time lows– with more than half of that increase occurring over the past eight weeks.
With home prices expected to continue rising, even at a slower pace, affordability will increasingly challenge 2022 buyers as a decade-long underbuilding trend has left the housing market 5.8 million homes short of household growth. At the same time, we expect pandemic trends like workplace flexibility and competitive labor-market conditions to give workers the boost in income and wider search areas they need to navigate a still-challenging housing market successfully.” — Danielle Hale, Chief Economist, realtor.com®
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to jgrice@rismedia.com.
