US Home Prices Surged Over 20 Percent in March 2022: Case–Schiller Index

Newly constructed single family homes for sale in Encinitas, Calif., on July 31, 2019. (Mike Blake/Reuters)

Home prices in the United States soared in the month of March with major cities seeing an increase in prices, according to the latest results from the S&P CoreLogic Case–Shiller Indices.

The Case–Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, registered a 20.6 percent annual gain in March 2022, according to a May 31 index announcement by S&P Global. This is slightly up from the 20 percent gain in February.

The 10-city composite index saw an increase of 19.5 percent in March while the 20-city composite index rose by 21.2 percent. Both indices spiked by a higher percentage than the previous month.

Among the 20 cities in the index, the highest year-over-year gains were reported in Tampa, Florida, at 34.8 percent, Phoenix at 32.4 percent, and Miami at 32 percent. Home prices were strongest in the South with a gain of 29.8 percent, followed closely by the southeast United States with gains of 29.6 percent.

The national and the 20-city composite readings recorded the highest year-over-year price change in over 35 years.

“The strength of the Composite indices suggests very broad strength in the housing market, which we continue to observe,” said Craig J. Lazzara, managing director at S&P DJI.

“All 20 cities saw double-digit price increases for the 12 months ended in March, and price growth in 17 cities accelerated relative to February’s report. March’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them,” he said.

However, as mortgages become more expensive in response to the Federal Reserve pushing up interest rates, home price growth won’t last much longer, Lazzara said.

A May 31 Reuters poll confirmed this prediction, as the rate of home price increases slowed to 10.3 percent in May.

U.S. home prices rose by 18.7 percent between the first quarter of 2021 and the first quarter of 2022, a May 31 news release from the Federal Housing Finance Agency (FHFA) said. Home prices in all 50 states and the District of Columbia rose during this period.

Florida led with a 29.8 percent gain, Arizona with 27.5 percent, Utah with 26.8 percent, Tennessee with 25.8 percent, and Idaho with 25.5 percent. In the first quarter of 2022, home prices were up by 4.6 percent compared to the fourth quarter of 2021.

“Strong demand coupled with tight supply have kept prices climbing,” said William Doerner, Ph.D., supervisory cconomist in FHFA’s Division of Research and Statistics. “Through the end of March, higher mortgage rates have not yet translated into slower ​​price gains, but new home sales have dropped during the last few months, with a significant falloff in April.”

Rising mortgage rates have triggered a housing market shift of late, with home sellers hurrying to find buyers before prices dip, according to Daryl Fairweather, chief economist at real estate brokerage firm Redfin.

More sellers are also dropping their prices. In the four weeks ending May 15, nearly 18 percent of sellers reduced their prices, according to Redfin. This is the highest proportion since October 2020.