U.S. home prices continued to increase in February, when the economy was still gaining momentum and the coronavirus pandemic was just beginning to reach our shores.
According to the S&P CoreLogic Case-Shiller home price index, home prices increased 0.5% on a seasonally adjusted basis in February compared with January.
The index’s 10-city and 20-city composites each posted a 0.4% month-over-month increase.
Year-over-year, home prices were up 4.2% compared with February 2019.
The 10-city composite saw home prices increase 2.9%, year-over-year, while the 20-city composite posted a 3.5% year-over-year gain.
Phoenix, Seattle, Tampa and Charlotte reported the highest year-over-year gains among the 20 cities. Phoenix led the way with a 7.5% year-over-year price increase, followed by Seattle at 6.0% and Tampa and Charlotte each with 5.2% increases.
“The stable growth pattern established in the last half of 2019 continued into February,” says Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, in a statement. “The National Composite Index rose by 4.2 percent in February 2020, and the 10- and 20-City Composites also advanced (by 2.9 percent and 3.5 percent, respectively).
“Results for the month were broad-based, with gains in every city in our 20-city composite – 17 of the 20 cities saw accelerating prices,” Lazzara adds. “The national, 10-city, and 20-city composites all rose at a faster rate in February than they had in January.
“At a regional level, Phoenix retains the top spot for the ninth consecutive month, with a gain of 7.5 percent for February,” Lazzara says. “Home prices in Seattle rose by 6.0 percent, with Tampa and Charlotte prices both gaining 5.2 percent. Prices were particularly strong in the West and Southeast, and comparatively weak in the Midwest and Northeast.
“Importantly, today’s report covers real estate transactions closed during the month of February, and shows no signs of any adverse effect from the governmental suppression of economic activity in response to the COVID-19 pandemic,” he says. “As much of the U.S. economy was shuttered in March, next month’s data may begin to reflect the impact of these policies on the housing market.”
The big question now is how quickly the housing market will rebound once the pandemic ends.
“The Case-Shiller Indexes for February showed strong enthusiasm in the housing market prior to the COVID-10 pandemic,” says Selma Hepp, deputy chief economist for CoreLogic, in a separate statement. “Home buyers, particularly millennials, were encouraged by falling mortgage rates and a strong employment market. But, developing insights into COVID-19 impacts on the U.S. economy put some uncertainty around housing markets. Mortgage rates remain historically low and millennials are still active in the market, which suggests that while the spring home-buying season may be disappointing, there are promising fundamentals for the housing market when the economy picks up speed again.”