Housing prices continued to exhibit strong growth in March, as rising mortgage rates did little to make their full impact on the market.
Multiple data sources show price growth continued to increase in March. According to the Federal Housing Finance Agency House Price Index, home prices increased 1.5 percent between February and March, while the S&P Corelogic Case-Shiller Index showed a 2.6 percent month-over-month increase.
The FHFA’s data shows a 18.7 percent increase in housing prices between the first quarter of 2021 and 2022, while S&P Corelogic recorded a 20.6 percent annual gain in March, up from a 20.0 percent annual gain in February.
Experts attributed the continued growth to the factors that have driven the manic housing market over the past year: tight supply and outsized demand, a dynamic that has only recently started to shift under the weight of increasing mortgage rates.
“The first quarter of 2022 was marked by some of the most competitive housing market conditions since the onset of the pandemic,” CoreLogic Deputy Chief Economist Selma Hepp said in a statement. “Home-buyer frenzy reached another new high as eager buyers pursued last-ditch efforts to secure a home purchase before the mortgage rate surge.”
The effects of recent rate hikes will likely not be made evident in home price data until next month, according to S&P DJI Managing Director Craig Lazzara.
“Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer,” Lazzara said in a statement. “March’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them.”
The S&P’s 10 and 20 city composites, which compiles housing prices from the 10 and 20 of the nations largest metropolitan areas recorded annual 19.5 percent and 21.2 percent increases respectively, with sun belt cities Tampa, Phoenix, and Miami hosting the largest price gains among the 20 cities.
“The strength of the Composite indices suggests very broad strength in the housing market, which we continue to observe,” said Lazzara. “All 20 cities saw double-digit price increases for the 12 months ended in March, and price growth in 17 cities accelerated relative to February’s report. March’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them.”
While the rise in mortgage rates did little to effect price growth, its effect could be seen in new home sales, which saw their most significant drop of the past two years in April when they dropped 16.6 percent month over month as buyers grappled with mortgage rates above 5 percent for the first time in years.