US Home Prices at their Highest in 34 Years: Phoenix, Tampa and Miami Top the List
Phoenix, Tampa and Miami reported the highest year-over-year gains among the 20 cities in the index in December, according to a press release. Phoenix led the way with a 32.5% year-over-year price increase, followed by Tampa with a 29.4% increase and Miami with a 27.3% increase. Fifteen of the 20 cities reported higher price increases in the year ending Dec. 2021 versus the year ending Nov. 2021.
“We have noted that for the past several months, home prices have been rising at a very high, but decelerating rate,” Craig J. Lazzara, managing director at S&P DJI, said in the release. “The deceleration paused in December, as year-over-year changes in all three composite indices were slightly ahead of their November levels. December’s 18.8% gain for the National Composite is the fifth-highest reading in history.”
Lazzara added that all 20 cities saw price increases in 2021, and prices in all 20 are at their all-time highs.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic,” he said in the release. “More data will be required to understand whether this demand surge simply represents an acceleration of purchases that would have occurred over the next several years rather than a more permanent secular change. In the short term, meanwhile, we should soon begin to see the impact of increasing mortgage rates on home prices.”
Mortgage rates rose again, reaching their highest level since Jan. 2020 — before the pandemic rocked financial markets, as GOBankingRates previously reported. In turn, the housing sentiment drifted lower — especially among younger generations — in January, according to a new Fannie Mae Home Purchase Sentiment Index (HPSI) released Feb. 7.
The index decreased 2.4 points to 71.8 in January, its lowest level since May 2020, as affordability constraints continue to weigh on the housing market, according to the HPSI.
CNN reported that a persistent low inventory of homes dropped to record low levels in December, according to the National Association of Realtors, and in the face of continued strong demand, prices were pushed higher. Newly constructed homes are in the pipeline, but a long-running shortage in supply combined with the lingering effects of the pandemic mean it will take years to meet demand, CNN added.
More From GOBankingRates