Topline
Despite rising mortgage rates, home prices soared to a new record in February, driven by strong demand and a limited housing supply—according to the S&P Case-Shiller Home Price Index released Tuesday.
Key Facts
Home prices across the U.S. rose by 6.4% in February from a year earlier, surpassing the previous month’s 6% annual gain and recording the fastest growth rate since November 2022—continually breaking past the record highs set last year, on a seasonal adjusted basis.
The jump is even more severe in big cities: Prices across 10 major cities grew by 8% year-over-year—up from January’s 7.4% increase—and prices in 20 major cities jumped 7.3%, up from a 6.6% annual gain in January; both indices are “currently at all-time highs,” according to Case-Schiller data.
San Diego continued to report the highest price hike, at 11.4% from last year, followed by Chicago and Detroit, which saw an 8.9% rise, while Portland recorded the slowest annual increase at 2.2%.
All cities in the index reported annual price increases, with four cities—San Diego as well as Los Angeles (8.7%), Washington D.C. (7.1%) and New York (8.7%)—hitting all-time highs.
U.S. home prices have pushed higher confronting “economic uncertainty,” as “enthusiasm for potential Fed cuts and lower mortgage rates appears to have supported buyer behavior,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a release.
Tangent
Large metropolitan regions in the Northeast—including Boston, New York and Washington D.C.—were the “best performing” market for over the last half-year, boosted by the return to office, while in the early 2020s “smaller” and “sunnier” markets thrived due to remote work trends.
Key Background
Even as mortgage rates have reached their highest level since November, persistent demand coupled with limited housing supply are key drivers pushing home values upward. Redfin’s report found last week that while new listings are up 10.2% year-over-year, this growth may lose momentum as rising mortgage rates could reinforce the lock-in effect, where homeowners opt to keep their existing low-rate mortgages rather than selling and purchasing homes at higher rates. The report also finds demand for housing—measured by Redfin’s Homebuyer Demand Index, taking requests for tours and other buying services from Redfin agents into account—stands at its highest level in about eight months. As prices are being buoyed amid low inventory and persistent demand, “the overall housing costs are likely to remain elevated for the foreseeable future,” said Redfin Economic Research Lead Chen Zhao.
