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U.S. home prices rose 0.7 percent in March from a year earlier, notching a second-consecutive month of annual increases while signaling a possible end to a year of price stagnation, according to data released Tuesday from CoreLogic.
Despite the razor-thin uptick, new data from the S&P CoreLogic Case-Shiller Index suggests that nearly a year of price declines that began at the start of summer last year may be coming to an end.
“The modest increases in home prices we saw a month ago accelerated in March 2023,” S&P Dow Jones Indices managing director Craig Lazzara said in a statement. “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.”
Before seasonal adjustment, the S&P U.S. National Index posted a 1.3 percent month-over-month increase between February and March. After seasonal adjustment, the increase softened to 0.4 percent.
The 10 and 20 city composites, which track price increases in the 10 and 20 most populous cities in the nation, experienced 0.6 percent and 0.5 percent month-over-month increases respectively, while also experiencing annual declines of 0.8 and 1.1 percent respectively.
The Federal Housing Finance Agency’s quarterly home prices report, also released Tuesday, found that home prices rose 4.3 percent between the first quarters of 2022 and 2023, with home prices rising in 43 states. The three states with the highest annual increases were South Carolina at 9.5 percent, North Carolina at 9.4 percent and Maine at 8.9 percent, according to the FHFA.
Economists attributed the uptick in home prices in March to regular seasonal surges brought by the Spring homebuying season — but noted that higher mortgage rates have resulted in significantly lower than normal activity.
“Today’s S&P CoreLogic Case-Shiller Index showed a slight acceleration in national home prices relative to last year though this spring lacks its typical energy due to ongoing inventory and affordability challenges,” Realtor.com economic data analyst Hannah Jones said in a statement. “The housing market is somewhat gridlocked as still-high housing costs and low inventory levels mean buyers face budget challenges as well as competition for the limited fresh listings on the market, leading to upward pressure on prices.”
Extremely low inventory has likewise helped fuel price increases by driving up competition among the buyers who can afford to stay in the market.
“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,” Zillow Senior Economist Nicole Bachaud said in a statement. “As a result, prices started picking back up on a monthly basis in early 2023 following months of price stagnation and declines.”
“As inventory remains a challenge in this market,” Bachaud added, “so too will affordability be rocked by stubbornly high prices that aren’t looking to move drastically any time soon.”
