Price gains for single-family homes broke from their trend of deceleration in January as rising rates, low supply and elevated inflation added upward pressure to the market, according to the most recent S&P CoreLogic/Case-Shiller Indices.
Home prices climbed 19.2% in January, up from 18.9% in December 2021, and all 20 cities saw year-over-year increases in home prices, according to the report. This fueled January to record the fourth-largest reading in the index’s history, experts indicated.
The 10-City Composite increased by 17.5%—up from 18.9% in January—while the 20-City Composite recorded a 19.1% price gain compared with the 18.6% seen in the previous month.
Phoenix led all cities for the 32nd consecutive month with a 32.6% increase in home prices. Tampa and Miami followed with prices jumping by 30.8% and 28.1%, respectively.
The complete data for the 20 markets measured by S&P:
Atlanta, Ga.
January 22/December ‘21: 1.5%
Year-Over-Year: 22.5%
Boston, Mass.
January 22/December ‘21: 0.7%
Year-Over-Year: 13.3%
Charlotte, N.C.
January 22/December ‘21: 1.3%
Year-Over-Year: 24.4%
Chicago, Ill.
January 22/December ‘21: 0.6%
Year-Over-Year: 12.5%
Cleveland, Ohio
January 22/December ‘21: 0.3%
Year-Over-Year: 13.3%
Dallas, Texas
January 22/December ‘21: 1.9%
Year-Over-Year: 27.3%
Denver, Colo.
January 22/December ‘21: 1.6%
Year-Over-Year: 20.8%
Detroit, Mich.
January 22/December ‘21: 0.7%
Year-Over-Year: 14.0%
Las Vegas, Nev.
January 22/December ‘21: 1.7%
Year-Over-Year: 26.2%
Los Angeles, Calif.
January 22/December ‘21: 1.6%
Year-Over-Year: 19.9%
Miami, Fla.
January 22/December ‘21: 1.8%
Year-Over-Year: 28.1%
Minneapolis, Minn.
January 22/December ‘21: 0.5%
Year-Over-Year: 11.8%
New York, N.Y.
January 22/December ‘21: 0.9%
Year-Over-Year: 13.5%
Phoenix, Ariz.
January 22/December ‘21: 1.7%
Year-Over-Year: 32.6%
Portland, Ore.
January 22/December ‘21: 0.9%
Year-Over-Year: 17.7%
San Diego, Calif.
January 22/December ‘21: 2.5%
Year-Over-Year: 27.1%
San Francisco, Calif.
January 22/December ‘21: 2.4%
Year-Over-Year: 20.9%
Seattle, Wash.
January 22/December ‘21: 2.0%
Year-Over-Year: 24.7%
Tampa, Fla.
January 22/December ‘21: 2.3%
Year-Over-Year: 30.8%
Washington, D.C.
January 22/December ‘21: 1.1%
Year-Over-Year: 11.2%
The takeaway:
“Home price changes in January 2022 continued the strength we had observed for much of the prior year,” said Craig J. Lazzara, managing director and global head of Index Investment Strategy at S&P Dow Jones Indices. “Last fall we observed that home prices, although continuing to rise quite sharply, had begun to decelerate. Even that modest deceleration was on pause in January. The 19.2% year-over-year change for January was the fourth-largest reading in 35 years of history.
“The strength in home prices continues to be very broadly based. All 20 cities saw price increases in January 2022, with prices in 16 cities accelerating relative to December’s report. January’s price increase ranked in the top quintile of historical experience for 19 cities, and in the top decile for 17 of them.
“The macroeconomic environment is evolving rapidly. Declining COVID cases and a resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response. We may soon begin to see the impact of increasing mortgage rates on home prices,” Lazzara said.
“Home prices rose at 19.2%—even in the middle of a snowy January—as buyers rushed to find a home in order to beat rising mortgage rates, which advanced 44 basis points during the month,” said George Ratiu, senior economist & manager of economic research, realtor.com. “The pace of home price growth reaccelerated, as available inventory remained low.
“The world has changed considerably since the start of the year, with a host of events shuffling the economic and real estate landscape. Globally, Russia’s invasion of Ukraine destroyed human lives, cities and roads, along with a long stretch of relative stability in Europe. The continuing war is impacting global trade and leading to renewed disruptions in supply chains. Domestically, inflation surged at levels not seen since the 1980s, prompting the Federal Reserve to take decisive action to increase the funds rate and signal a much more aggressive monetary tightening, which may include higher rate changes and balance sheet reductions in the months ahead.
“These factors signal a significant shift for real estate markets. While buyers remain interested and willing to purchase homes, mortgage rates are already moving toward 5.0% and starting to cap their ability to qualify for a loan. The monthly payment for a median-priced home has jumped 30% in the past year, far outpacing even fast-rising consumer prices, up almost 8% from a year ago. These higher costs impacted sales of both new and existing homes in February. While the small number of homes for sale will keep upward pressure on prices as we move through the spring buying season, I expect conditions to undergo noticeable adjustments in the months ahead. For sellers, April offers the ideal combination of higher prices and still-limited competition from other homeowners that typically ensure a successful close. For buyers, local market conditions and personal circumstances will determine if there’s more value in securing a fixed mortgage rate now versus holding out for more inventory and better prices later in the year.”
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to jgrice@rismedia.com.
