US home-price growth accelerated in February at the fastest annual pace since November 2022, a sign that America’s housing market remains tough amid elevated mortgage rates.
The S&P CoreLogic Case-Shiller US National Home Price Index, a measure of home prices across the country, rose 6.4% in February from a year earlier, a bigger increase than the 6% registered in January. On a monthly basis, the index advanced a seasonally adjusted 0.4% in February.
The Case-Shiller 20-city index also jumped in February, to an annual gain of 7.3%, up from January’s 6.6% rise. Of the 20 cities, San Diego saw the biggest increase in home prices in February, a steep 11.4% rise, followed by Chicago and Detroit. Meanwhile, home prices in Portland, Oregon, are “still holding the lowest rank after reporting two consecutive months of the smallest year-over-year growth,” according to a release.
America’s housing market began to recover in the beginning the year as home sales surged from decades-lows in the fall and homebuilders began to feel to more upbeat about the economy. There were also high hopes that the Federal Reserve would cut interest rates several times starting in the spring. That momentum seems to have fizzled out.
Existing home sales, which make up the vast majority of the housing market, fell sharply in March as home prices continued to rise that month, according to data from the National Association of Realtors. Residential construction of single-family homes also dropped sharply in March, according to government figures, declining 12.4% to a seasonally adjusted annual rate of 1.022 million units.
Inflation also proved to be much more stubborn than Wall Street and the Fed previously expected, which was sent bond yields surging since it means the Fed won’t be in a rush to cut interest rates.
The benchmark 10-year US Treasury yield closed above 4.7% last week, the highest level since November. Mortgage rates have followed suit, since they track the 10-year yield. The 30-year fixed-rate mortgage averaged 7.17% last week, a peak for the year and the highest level since November, according to Freddie Mac data. Economists don’t expect mortgage rates to drop meaningfully this year, and they could continue to climb if inflation remains stuck.
This story is developing and will be updated.
