Home prices across the U.S. rose 19.2% in January from the year before, S&P CoreLogic Case-Shiller Indices revealed in its report published on Tuesday (March 29).
The figure represented a rise in comparison to 18.8% registered in December and beat market estimates.
The 10-City Composite increased by 17.5% in contrast with the same month the previous year, going up from 17.1% seen in December while the 20-City Composite grew 19.1% year-over-year, up from 18.6% in the previous month.
Among the cities, the biggest annual rise was noted in Phoenix which led the way for the 32nd consecutive month with 32.6%, followed by Tampa with a 30.8% gain and Miami with 28.1%.
Phoenix, Tampa and Miami reported the highest annual gains among the 20 cities in the index in January. Phoenix led the way for the 32nd consecutive month with prices 32.6% higher than the year before. It was followed by Tampa with a 30.8% increase, and Miami with a 28.1% gain. . Sixteen of the 20 cities reported higher price increases in the year ending January 2022 versus the year ending December 2021.
Washington, D.C., Minneapolis and Chicago saw the smallest annual gains.
“Home price changes in January 2022 continued the strength we had observed for much of the prior year,” Craig J. Lazzara, Managing Director at S&P DJI said. “The 19.2% year-over-year change for January was the fourth-largest reading in 35 years of history. […] 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.”
George Ratiu, a senior economist at Realtor.com, said in a separate release: “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.”
Annual inflation rate in the US accelerated to 7.9% last month, the highest since January of 1982, according to Labor Department data.
The inflation was seen peaking in March but the recent developments in Europe coupled with the ongoing supply constraints, strong demand, and labour shortages will likely maintain inflation elevated for longer.
Added Ratiu: “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.”
The rapid acceleration in home prices could ease off in coming months if housing demand falls amid rising mortgage rates.