Finance
Home prices climb 6.4%, hit new record high in February: Case-Shiller
Homebuyers won’t get a break with home prices anytime soon. (iStock)
Home prices kept climbing in February and hit a new all-time record, defying odds that higher mortgage rates might have a more pronounced negative impact on gains, according to the latest S&P CoreLogic Case-Shiller national home price index report.
Home prices are now 6.4% above their level this time last year, up from the 6% increase registered in January. The 10-city composite increased 8% annually from 7.4% the previous month. At the same time, the 20-city composite posted a rise of 7.3%, up from 6.6% the previous month.
Across the nation, home prices increased 0.6% month-over-month after dipping the previous month. The 10-city composite registered 1% growth, while the 20-city composite increased by 0.9%. The indices measure home prices in major metros across the country. This annual and monthly growth in home prices comes as homebuyers struggle with affordability issues caused by high mortgage rates and a lack of housing supply.
“Since the previous peak in prices in 2022, this marks the second time home prices have pushed higher in the face of economic uncertainty,” S&P Dow Jones Indices Head of Commodities, Real & Digital Assets Brian D. Luke said. “The first decline followed the start of the Federal Reserve’s hiking cycle. The second decline followed the peak in average mortgage rates last October.”
“Enthusiasm for potential Fed cuts and lower mortgage rates appears to have supported buyer behavior, driving the 10- and 20-City Composites to new highs,” Luke continued.
One way to use your home’s equity is through a cash-out refinance to help you pay down debt or fund home improvement projects. Visit Credible to find your personalized interest rate without affecting your credit score.
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These cities saw the most significant house price gains
San Diego reported the highest year-over-year growth, with an annual increase of 11.4% in February—the highest year-over-year gain among the 20 cities. Chicago and Detroit followed in second place, each registering an annual increase of 8.9%. Portland, Oregon, saw the smallest gain in the index, just 2.2%.
“The Northeast region, which includes Boston, New York, and Washington, D.C., ranks as the best-performing market over the last half year,” Luke said. “As remote work benefited smaller (and sunnier markets) in the first part of the decade, return to office may be contributing to outperformance in larger metropolitan markets in the Northeast.”
Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
Mortgage rates will stay higher for longer
The personal consumption expenditures (PCE) price index, excluding food and energy prices — a key metric the Federal Reserve tracks to measure inflation — increased by 3.7% after rising to 2% in the fourth quarter, according to the latest gross domestic product (GDP) report. An increase in inflation could delay the timeline for rate cuts or even introduce possible rate hikes, according to Jim Baird, Plante Moran Financial Advisors’ chief investment officer.
“Recession fears have abated for now, but inflation remains a key concern for consumers and one for which the outlook remains mixed,” Baird said in a statement. “Inflation has receded significantly since peaking but has been stuck in a comparatively narrow range by most measures since last fall. Even a modest resurgence in inflation could spook consumers while further delaying potential Fed rate cuts or putting the possibility of some additional tightening back on the table.”
Since July, the central bank has kept its policy rate in the 5.25% to 5.5% range. Following its March meeting, Fed Chair Jerome Powell said that while interest rate cuts were still on the table for this year, the Fed remained committed to bringing inflation down to a 2% target rate and warned that lowering rates too soon would risk bringing inflation back while holding back too long posed a risk to economic growth.
Mortgage rates have hovered above 7% for two weeks, and borrowing costs will likely continue to increase as the prospect of interest rate cuts moves further into the distance.
“As with many economic indicators, the road to normalizing housing markets remains windy,” CoreLogic Chief Economist Selma Hepp said. “While home sales and inventories are improving over last year’s bottom, higher mortgage rates continue to challenge affordability and keep many potential buyers on the sidelines.”
If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
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