U.S. home prices increased 0.2% in February compared with January and were up only 2.0% compared with February 2022, according to the S&P CoreLogic Case-Shiller home price index.
Lack of supply was the main factor keeping U.S. home prices from turning negative.
The index’s 10-city and 20-city composites – measuring home price growth in the top 20 largest U.S. cities – each posted increases of only 0.1%, month-over-month.
Miami, Tampa, and Atlanta again reported the highest year-over-year gains among the 20 cities in February. The order remained the same with Miami leading the way with a 10.8% year-over-year price increase, followed by Tampa at 7.7% and Atlanta at 6.6%.
“Home price trends moderated in February,” says Craig J. Lazzara, managing director at S&P DJI, in a statement. “The National Composite, which had declined for seven consecutive months, rose a modest 0.2 percent in February, and now stands 4.9 percent below its June 2022 peak.”
“The moderation we observed nationally is also apparent at a more granular level,” Lazzara adds. “Before seasonal adjustment, prices rose in 12 cities in February (versus in only one in January). Seasonally adjusted data showed nine cities with rising prices in February (versus five in January). With or without seasonal adjustment, most cities’ February results showed improvement relative to their January counterparts.”
Lazzara notes that there were “stark regional differences” in home price gains in February.
“Miami’s 10.8 percent year-over-year gain made it the best-performing city for the seventh consecutive month. Tampa (+7.7 percent) and Atlanta (+6.6 percent) continued in second and third place, with Charlotte (+6.0 percent) close behind,” he says. “Results were different in the Pacific and Mountain time zones. Last month, four West Coast cities (San Francisco, Seattle, San Diego, and Portland) were in negative year-over-year territory. In February they were joined by four of their western neighbors, as Las Vegas (-2.6 percent), Phoenix (-2.1 percent), Los Angeles (-1.3 percent), and Denver (-1.2 percent) all tipped into negative territory. It’s unsurprising that the Southeast (+7.8 percent) remains the country’s strongest region, while the West (-4.2 percent) continues as the weakest.”
Lazzara notes that February’s home price data “pre-date the disruptions in the commercial banking industry which began in early March.”
“Although forecasts are mixed, so far the Federal Reserve seems focused on its inflation-reduction targets, which suggests that interest rates may remain elevated, at least in the near-term,” he says. “Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.”
Earlier this week, CoreLogic released its home price index report for March, which shows that home prices increased 1.6% compared with with February – a stronger month for home price gains by comparison.
The S&P CoreLogic Case-Shiller report for March will be released later this month.
Photo: Kostiantyn Li