U.S. home prices jumped 2.2% in February compared with January and were up 20% compared with February 2021, according to CoreLogic’s home price index report.
However, home price growth is projected to slow to 5% over the next 12 months, due mainly to rising interest rates.
Home prices have seen year-over-year double digit gains for the past 12 months, driven by tight inventory and strong demand – particularly for detached single-family homes.
In February, annual appreciation of detached properties (21.1%) was 4.8 percentage points higher than that of attached properties (16.3%), according to CoreLogic’s data.
There were significantly more buyers than sellers. This, coupled with a record-low number of homes for sale is what drove the rapid price gains.
”New listings have not kept up with the large number of families looking to buy, leading to homes selling quickly and often above list price,” says Frank Nothaft, chief economist at CoreLogic, in a statement. “This imbalance between an insufficient number of owners looking to sell relative to buyers searching for a home has led to the record appreciation of the past 12 months.”
But, as higher prices and mortgage rates erode buyer affordability, demand will wane, Nothaft says. As a result, home price gains are projected to slow to 5% by February 2023.
In February, Naples, Florida logged the highest year-over-year home price increase at 41.4%.
Cape Coral, Florida ranked second, with a 40% year-over-year increase.
At the state level, warmer regions of the U.S. continued to show the largest increases, with Florida showing the country’s strongest price growth at 29.1%.
Arizona ranked a close second with 28.6% growth, while Nevada was third, at 25.8%.
Last week’s S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index report showed that home prices increased nearly 20% year-over-year in January.
Photo: Pepi Stojanovski
