Home Prices Soar 19% in January, Dashing Hopes that Housing Prices Will Decelerate

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Average home prices in the United States once again accelerated in January, rising 19.2% year-over-year as high demand and tight supply outweighed the prospect of rising mortgage rates.

January saw the fourth largest in the last three-and-a-half decades and came in above the 18.9% price increase logged in December, according to the S&P CoreLogic Case-Shiller Index, which was released on March 29. The annual 10-City Composite rose 17.5% in January, up from 17.1% the previous month. The 20-City Composite posted a 19.1% year-over-year gain vs. an 18.6% increase in December.

Phoenix, Tampa and Miami reported the highest year-over-year gains in January, with Phoenix home prices rising by about one-third (32.6%), Tampa prices rising 30.8%, and Miami prices increasing 28.1%. Sixteen of the 20 cities reported higher price increases in the year ending January 2022 than the year ending December 2021. 

January’s figures put at least a temporary halt to the slower increases seen at the end of 2021.

“Last fall we observed that home prices, although continuing to rise quite sharply, had begun to decelerate,” Craig J. Lazzara, Managing Director at S&P Dow Jones Indices, said in a press release. “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 rapid acceleration in home prices could ease off in coming months if housing demand falls amid rising mortgage rates. As GOBankingRates previously reported, the average 30-year fixed mortgage rate was 4.42% as of March 24, according to Freddie Mac. That’s up from 3.11% as recently as December.

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“The macroeconomic environment is evolving rapidly,” Lazzara said. “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.”

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