A key gauge of US home prices notched another new record, data out Tuesday showed.
The S&P/Case-Shiller 20-city index rose 20.2% in February on a YoY basis, the most ever (figure below). The national gauge wasn’t far behind. It rose 19.8% from the same period a year ago.
February’s prints were the culmination of a pickup in the pace of price appreciation, which slowed late last year, only to reaccelerate.
On a monthly basis, the 20-city index rose 2.4% in February, while the national index rose nearly 2%.
The two-month delay on which the figures are reported matters at the current juncture. Mortgage rates rose above 5.10% last week to the highest in over a decade. Between that, the onerous downpayment burden implied by meteoric price appreciation and the squeeze on households from higher food and energy costs, some worry the housing market is teetering precariously on the brink of a correction.
“The macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer,” Craig Lazzara, managing director at S&P Dow Jones Indices, said Tuesday, in a statement accompanying the data.
“The post-COVID resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response,” Lazzara added, before suggesting “we may soon begin to see the impact of increasing mortgage rates on home prices.”
Note that Tuesday’s numbers at least partially predate the surge shown in the figure (above).
New home sales figures for March, also released on Tuesday, showed both median and average prices scaled new peaks.
Although insatiable demand from deep-pocketed investors could support prices in the face of sharply higher borrowing costs, waning interest from tapped-out families will eventually take a toll. After all, “houses are for living,” as Xi Jinping would put it.
