Sold sign sits outside the house.
Adam Jeffery | CNBC
The rise in mortgage rates did not slow down the rise in house prices in March.
Nationally, home prices were 20.6% higher than in March 2021, according to the S&P CoreLogic Case-Shiller Home Price Index. This is higher than the 20% increase in February. The index is a three-month moving average ending in March.
According to Mortgage News Daily, the average rate on 30-year fixed mortgages was 3.29% at the beginning of January and 4.67% at the end of March.
The 10-city Case-Shiller Composite Index rose 19.5% year-on-year in March from 18.7% in February. The combined figure from the 20 cities rose 21.2% year-on-year, compared with 20.3% in the previous month. For both national and 20-city summary data, the March value was the highest year-on-year price change in more than 35 years of data.
At the regional level, Phoenix slipped away from the top spot for the first time in three years, and Tampa, Florida took its place. Tampa, Phoenix, and Miami continued to see the highest annual gains, at 34.8%, 32.4%, and 32.0%, respectively. Seventeen of the 20 cities reported higher price increases in the year ending March 2022 compared to the year ending February 2022.
“Those of us who expected a slowdown in U.S. house price growth will have to wait at least another month,” said Craig Lazzara, managing director of S&P DJI. “All 20 cities saw double-digit price increases in the 12 months ending March, with price increases in 17 cities accelerating from the February report.”
The cities that saw the smallest price increases, although still in double digits compared to last year, were Minneapolis (+12.4%), Washington (+12.9%) and Chicago (+13%).
Prices are expected to start declining as home sales have been falling for several months now. Demand, however, is still strong and real estate agents report that they are still seeing plenty of good value homes. More offers are also entering the market as sellers fear they will miss out on the last days of the hot market.
“Mortgages are getting more expensive as the Federal Reserve began raising interest rates, suggesting that the macroeconomic environment may not support the extraordinary rise in home prices for a long time. While it is safe to predict that price growth will begin to slow down, the timing of the slowdown is more of a challenge,” added Lazzara.