Home Prices Rise More Than 20% Year-Over-Year, Biggest Surge in 35 Years

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Home Prices Rise More Than 20% Year-Over-Year, Biggest Surge in 35 Years

Case-Shiller index rose 20.6% as home-buying demand outweighed limited supply of

By Nicole Friedman, WSJ

May 31, 2022 9:02 am ET

Home-price growth rose to a new record in March as robust home-buying demand outweighed the limited supply of homes for sale.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 20.6% in the year that ended in March, up from a 20% annual rate the prior month. March marked the highest annual rate of price growth since the index began in 1987.

The inventory of existing homes on the market in March sat well below normal levels for that time of year, making it difficult for buyers to compete and pushing prices higher.

Mortgage rates have climbed swiftly since the start of the year. While higher mortgage rates have started to reduce buyer demand, home prices remain sky high as demand continues to exceed supply. Economists say the rate of home-price growth is likely to slow by the end of the year.

“Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer,” said Craig Lazzara, managing director at S&P Dow Jones Indices.

The Case-Shiller index, which measures repeat-sales data, reports on a two-month delay. Inventory has risen since March but remains below typical levels. The median existing-home price rose 14.8% in April from a year earlier, the National Association of Realtors said, to $391,200, a record high in data going back to 1999.

In recent weeks, the housing market has shifted, said Danielle Hale, chief economist for Realtor.com. “As buyer confidence sags and weighs down demand, real-estate markets will rebalance, eventually tilting away from the heavy advantage that recent home sellers have enjoyed.” News Corp, parent of The Wall Street Journal, operates Realtor.com.

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The Case-Shiller 10-city index gained 19.5% over the year ended in March, compared with an 18.7% increase in February. The 20-city index rose 21.2%, after an annual gain of 20.3% in February. Price growth accelerated in 17 of the 20 cities.

Economists surveyed by The Wall Street Journal expected the 20-city index to gain 20%.

Tampa had the fastest home-price growth in the country, at 34.8%, breaking Phoenix’s record streak in the top spot. Phoenix posted the second-fastest growth, at 32.4%.

A separate measure of home-price growth by the Federal Housing Finance Agency also released Tuesday found a 19% increase in home prices in March from a year earlier.