Home price growth hit an all-time high in March: This is how homeowners can cash in
Case-Shiller index posts 20.6% annual increase
Home prices surged 20.6% annually in March, according to the latest S&P CoreLogic Case-Shiller Index, and marked the strongest annual gain in the history of the report. The bump was an increase from the 20% annual gain seen in February, and prices jumped 2.1% from February to March on a monthly basis.
"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," S&P Dow Jones Indices Managing Director Craig Lazzara said. "For both National and 20-City Composites, March's reading was the highest year-over-year price change in more than 35 years of data, with the 10-City growth rate at the 99th percentile of its own history."
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Phoenix falls from top spot for home price gains
The 10-City Composite, which measures home prices in the top 10 U.S. cities, posted a 19.5% annual gain. It marked an increase from the 18.7% gain the month before, according to Case-Shiller. The 20-City Composite index held a 21.2% year-over-year increase, a new all-time high and up from the 20.3% increase the previous month.
The 10-City and 20-City Composites grew 2.8% and 3.1% monthly in March, respectively, the report showed. All 20 cities posted gains in March after seasonal adjustments.
Notably, Phoenix, Arizona fell from the No. 1 spot when it comes to home price gains for the first time in nearly three years. Tampa, Florida posted the largest increase with 34.8% year-over-year gains, followed by Phoenix at 32.4% and Miami at a 32% increase.
"After 32 months of logging the strongest home price gains, Phoenix's price growth slowed considerably more than the other metro regions and is now outpaced by Tampa, Florida," CoreLogic Deputy Chief Economist Selma Hepp said. "Nevertheless, the first quarter of 2022 was marked by some of the most competitive housing market conditions since the onset of the pandemic."
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Interest rates continue to rise: Here's what you need to know
As home prices continue to go up, mortgage rates are also increasing, which means that the cost to buy a new home could continue to become less affordable.
The Federal Reserve raised interest rates by half a percentage point for the first time in 20 years at its May meeting, following a 25-basis-point hike in March. The Fed is also forecasting that it's likely to raise rates several more times this year and into 2023.
"Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer," Lazzara said. "Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call."
If you are interested in purchasing a new home or pulling cash out of your current dwelling, contact Credible to speak to a home loan expert and get all of your questions answered.
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