The S&P CoreLogic Case-Shiller National Home Price Index posted a 19.2% annualized increase in January, marking the largest gain for the opening month of any year since tracking began.
The yearly bump in the national index was up from 18.9% during the previous month and halted a four-month period of slowing or stagnant growth. The urban components of the U.S. index also saw increases, with the 10-city composite growing by 17.5% (up from 17.1% in December) and the 20-city composite rising by 19.1% (up from 18.6% a month earlier).
“Home-price changes in January 2022 continued the strength we had observed for much of the prior year,” said Craig J. Lazzara, managing director at S&P DJI.
“Last fall we observed that home prices, although continuing to rise quite sharply, had begun to decelerate. Even that modest deceleration was on pause in January. The 19.2% year-over-year change for January was the fourth-largest reading in 35 years of history.”
Selma Hepp, deputy chief economist at CoreLogic, said that while prices had started to moderate somewhat, January’s reversal wasn’t necessarily a shock.
“While the reacceleration of home-price gains may be concerning, and likely discouraging for first-time and younger buyers, it is nevertheless unsurprising considering the dire inventory of for-sale homes, which continues to decline and continually record new lows,” she said. “With mortgage rates jumping to three-year highs, existing homeowners now have little incentive to sell and buy a new, more expensive home with a higher mortgage rate. And while surging interest rates were expected to have a dampening effect on demand, there are still many buyers in the market who are able to afford the rising costs of homeownership.
“As a result, buyer competition this spring surged again and two out of three homes sold over the asking price – the same as last summer’s peak.”
All 20 cities tracked by the indices posted price increases in January, with prices in 16 of these cities speeding up compared to their December gains. Lazzara noted that, for 19 of these cities, January’s growth ranked in the top quintile of historical gains. Phoenix’s yearly increase of 32.6% led all cities for the 32nd straight month, followed again by Tampa (30.8%) and Miami (28.1%).