Home prices increase at fastest rate since November 2022

American home prices are rising rapidly again, as interest rates remain elevated.

Home sale prices rose 6.4 percent year-over-year in February, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. The gains represent the fastest annual rate since November 2022, outpacing January’s 6 percent annual jump.

The increase comes despite a rise in mortgage rates in recent weeks, something that may become clearer in the Case-Shiller reports in the coming months. Inventory also remains historically tight, shooting prices upwards.

Month-to-month, all three indices in the Case-Shiller report recorded gains for the first time since October. The national index increased 0.6 percent on an unadjusted basis, while the 20-City Composite rose by 0.9 percent and the 10-City Composite by 1 percent. Both composites notched all-time records in February. San Diego, Los Angeles, Washington, D.C., and New York were the cities recording all-time pricing highs.

On an annual basis, the 20-City Composite increased 7.3 percent, while the 10-City Composite rose by 8 percent. Every city tracked in the former posted annual jumps in prices for the third consecutive month, ranging from San Diego’s 11.4 percent increase to Portland’s more modest 2.2 percent increase. Chicago and Detroit rounded out the top three of annual price increases.

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The Northeast remains the strongest performing region of the past six months, S&P Dow Jones Indices’ Brian Luke said in a statement. Home sales in Northeastern cities, including New York, Boston and Washington, D.C., may be benefiting from the push to get office workers back at their desks, Luke added.

Luke cited “enthusiasm” for possible Federal Reserve interest rate cuts as a factor that drove buyer behavior in February. 

Since then, however, the hope of rate cuts has largely been dashed by persistent inflation, which could cause Jerome Powell and his colleagues to press the brakes on a plan to cut interest rates this year.