Low housing inventory and still-strong demand kept prices high in March, according to the latest according to the S&P CoreLogic Case-Shiller National Home Price Index, released Tuesday. The annual growth rate in March 2023 was up 0.7%. On a month-over-month basis, the index was up 1.3% before seasonal adjustment.
This was the second month-over-month increase following seven consecutive month-over-month decreases.
“The modest increases in home prices we saw a month ago accelerated in March 2023,” Craig Lazzara, the managing director at S&P DJI, said in a statement. “The National Composite rose by 1.3% in March, and now stands only 3.6% below its June 2022 peak.”
Both the 10-city and 20-city composite price indexes posted annual declines but monthly gains. For the 20-city composite, 19 of the 20 cities reported lower prices in the year ending March 2023 versus the 12-month period ending February 2023, with Chicago being the only city to report an increase at 0.4%.
“Low inventory, maintained by an extremely low level of new listings coming onto the market, has fueled demand amongst the few buyers who can afford to stay shopping. As a result, prices started picking back up on a monthly basis in early 2023 following months of price stagnation and declines,” Nicole Bachaud, Zillow’s senior economist, said in a statement. “As inventory remains a challenge in this market, so too will affordability be rocked by stubbornly high prices that aren’t looking to move drastically any time soon. New construction could be the beacon of light the housing market desperately needs right now, as home builders are gaining confidence amongst rising sales, hopefully soon to translate to more residential construction breaking ground in the coming months.”
Yet again, Miami (7.7%) and Tampa (4.8%), reported the highest annual price gains among the 20-cities analyzed, but Atlanta was bumped from the top-three by Charlotte, which recorded an annual price increase of 4.7%.
“One of the most interesting aspects of our report continues to lie in its stark regional differences. Miami’s 7.7% year-over-year gain made it the best-performing city for the eighth consecutive month,” Lazzara said. “Tampa (+4.8%) continued in second place, narrowly ahead of bronze medalist Charlotte (+4.7%). The farther west we look, the weaker prices are, with Seattle (-12.4%) now leading San Francisco (-11.2%) at the bottom of the league table. It’s unsurprising that the Southeast (+5.4%) remains the country’s strongest region, while the West (-6.2%) remains the weakest.”
Although March marked the second consecutive month of monthly price increases, Lazzara does not believe the industry is out of the woods yet. “Two months of increasing prices do not a definitive recovery make, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end,” he said. “That said, the challenges posed by current mortgage rates and the continuing possibility of economic weakness are likely to remain a headwind for housing prices for at least the next several months.”
The average rate in March on a 30-year-fixed rate mortgage in March was 6.54%, with the rate dropping to 6.34% in April.
Relatedly, the Federal Housing Finance Agency (FHFA) recorded a 4.3% increase in home prices in the first quarter of 2023 from the first quarter in 2022. House prices were up 0.5% compared to the fourth quarter of 2022. The FHFA’s seasonally adjusted monthly index for March was up 0.6% from February.
House prices rose in 78 of the top 100 largest metropolitan areas over the last four quarters. Per the FHFA’s HPI, the annual price increase was greatest in Miami-Miami Beach-Kendall, FL at 14.1% while the San Francisco metro area experienced the greatest price decline at 10.1%.
