‘We’ve witnessed records repeatedly break in both stock and housing markets over the past year,’ Brian D. Luke at S&P Dow Jones Indices says
The numbers: Home prices in the 20 biggest U.S. metros hit another all-time high, as the housing market remains hampered by a low number of properties for sale.
The S&P CoreLogic Case-Shiller 20-city house price index rose 0.3% in March compared to the previous month.
Home prices in the 20 major U.S. metro markets were up 7.4% in the last 12 months ending in March. Economists surveyed by Dow Jones Newswires and The Wall Street Journal expected the 20-city index to increase 7.3%.
A broader measure of home prices, the national index, rose 0.3% in March and was also up 6.5% over the past year. All numbers are seasonally adjusted.
The 20-city and the national index are at an all-time high.
Key details: San Diego posted the biggest year-over-year home-price gains in March. Prices were up 11.1%.
All 20 major markets reported yearly gains.
Home prices grew the slowest in Denver, by 2.1%.
A separate report from the Federal Housing Finance Agency also showed home prices rose 0.1% in March from the previous month, and were up 6.7% in the past year.
And over the first quarter of 2024, home prices rose 6.6% as compared with last year, the FHFA said. Home prices rose the fastest in Vermont, New Jersey, and New York.
The median price of a resale home was $392,900 in March, and a newly built home was $439,500.
Big picture: When looking at prices alone, the housing sector looks remarkably resilient, as prices keep going up. But the gains are driven by a scarcity of homes for sale, and with pent-up demand pooling on the sidelines, waiting for mortgage rates to fall, prices look poised to go even higher. Until more homeowners sell their homes and open up housing supply, prices will likely be stuck in an upward trajectory.
What S&P said: “This month’s report boasts another all-time high,” Brian D. Luke, head of commodities, real estate and digital assets at S&P Dow Jones Indices, said in a statement.
“We’ve witnessed records repeatedly break in both stock and housing markets over the past year,” he continued. “Our National Index has reached new highs in six of the last 12 months. During that time, we’ve seen record stock market performance, with the S&P 500 hitting fresh all-time highs for 35 trading days in the past year.”
Luke noted that the Northeast had dethroned the Sun Belt in terms of home price growth. Pandemic-era hotspots, such as Tampa, Phoenix and Dallas cities saw “top-tier performance in 2020 and 2021,” Luke said, but have since been growing at a slower pace.
With all 20 metro markets posting annual gains for the fourth month in a row, that reveals the extent to how “widespread and sustained growth [is] in the housing sector,” Luke said.
What are they saying? “The solid 0.3% [month-over-month] rise in house prices in March suggests that competition among buyers for the limited number of second-hand homes on the market remains strong,” Thomas Ryan, an economist focused on North America at Capital Economics, wrote in a note. “We expect that to continue for the rest of the year, consistent with our above-consensus forecast that house price growth will end 2024 at 5% [year-over-year].”
“We continue to see home prices push higher in most markets despite elevated mortgage rates and the rising cost of homeownership in general,” Selma Hepp, chief economist at CoreLogic, said in a statement. “Nevertheless, home price gains are driven by markets with strong employment centers and affordability opportunities, while markets with more for-sale inventories are seeing slower rates of home price appreciation.”
Looking ahead: “We will probably see some more weakness in home prices across the US in the coming months as the recent increase in mortgage rates affects purchase behavior,” analysts at Raymond James wrote in a note.
Source: marketwatch.com
