Case-Shiller’s Month-Over-Month Spike Among Strongest Recorded

S&P Dow Jones Indices has released the latest results for the S&P CoreLogic Case-Shiller Indices, a measure of US home prices. Data released for January 2022 show that home prices continue to increase across the United States. 

The S&P CoreLogic Case-Shiller US National Home Price NSA Index, covering all nine US census divisions, reported a 19.2% annual gain in January, up from 18.9% in the previous month. 

Bill McBride, author, Calculated Risk blog, pointed out that the month-over-month increase was at 1.56%. 

“This is the seventh strongest MoM increase in the Case-Shiller index (since 1975), and stronger than any month during the housing bubble or during the late ‘70s with high inflation,” he wrote. “Still, the peak MoM growth is behind us, although price growth did accelerate in January.”

Phoenix, Tampa, Miami Top Gainers

The 10-City Composite annual increase came in at 17.5%, up from 17.1% in the previous month. The 20-City Composite posted a 19.1% year-over-year gain, up from 18.6% in the previous month.

Phoenix, Tampa, and Miami reported the highest year-over-year gains among the 20 cities in January. 

Phoenix led the way with a 32.6% year-over-year price increase, followed by Tampa with a 30.8% increase and Miami with a 28.1% increase. Sixteen of the 20 cities reported higher price increases in the year ending January 2022 versus the year ending December 2021. 

Prices Rose in All 20 Cities Tracked

Before seasonal adjustment, the US National Index posted a 1.1% month-over-month increase in January, while the 10-City and 20-City Composites both posted increases of 1.4%.

After seasonal adjustment, the US National Index posted a month-over-month increase of 1.6%, and the 10-City and 20-City Composites both posted increases of 1.8%.

In January, all 20 cities reported increases before and after seasonal adjustments.

Continued Strength in Home Prices

“Home price changes in January 2022 continued the strength we had observed for much of the prior year,” Craig J. Lazzara, Managing Director at S&P DJI, said in prepared remarks.

The National Composite Index recorded a gain of 19.2% for the 12 months ended in January 2022; the 10- and 20-City Composites rose 17.5% and 19.1%, respectively. All three composites reflect a small acceleration of price growth for January 2022.

“Last fall we observed that home prices, although continuing to rise quite sharply, had begun to decelerate,” Lazzara said. “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.

“The strength in home prices continues to be very broadly based. All 20 cities saw price increases in January 2022, with prices in 16 cities accelerating relative to December’s report. January’s price increase ranked in the top quintile of historical experience for 19 cities, and in the top decile for 17 of them.”

Phoenix’s 32.6% price increase led all cities for the 32nd consecutive month. Tampa (+30.8%) and Miami (+28.1%) continued in silver and bronze positions in January. Prices were strongest in the South (+26.6%) and Southeast (+26.5%), but every region continued to log impressive gains.

Will Rising Mortgage Rates Have An Effect? 

Changes in the macroeconomic environment, however, could bring about changes in these trends, Lazzara pointed out. 

“Declining COVID cases and a resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response,” he said. “We may soon begin to see the impact of increasing mortgage rates on home prices.”

Others are not so sure. Will Doerner, supervisory economist in FHFA’s Division of Research and Statistics, noted that while rising mortgage rates in January reflect a major change from the past several years, lending costs remain relatively low. 

“The mortgage rate shift has not dampened upward price pressure from intense borrower demand and limited supply,” he said.