Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Case-Shiller Index Shows Single-family Home Prices Up 20.6% in March 2022

Single-family existing-home prices rose at a faster pace of 20.6% in the three months ending in March, according to the Case-Shiller index. The latest data shows prices continued to heat up over the 3-month period even as mortgage rates started to rise to, and over, 4% in March. This torrid pace of appreciation reflects the tight inventory conditions seen during the period in January–February 2022 when single-family homes for sale hit their lowest level of just 740,000 units, and of buyers likely trying to lock in their mortgage in anticipation of further rate hikes.

Worth noting in the latest Case-Shiller data is that the 20-city composite index (which includes "secondary" markets), rose at a faster pace of 21.2%. This is faster than the 10-city composite index (which includes "primary" markets), which rose at a slower pace of 19.5%. This is yet another indicator that the growth in the housing market demand is occurring largely in the secondary markets. Four cities had price gains of over 30%: Tampa (34.8%), Phoenix (32.4%), Miami (32%), and Dallas (30.7%). Only Miami is part of the 10-city index.1

Over the coming months, mortgage rate movement will be the main factor driving demand and price growth. The 30-year fixed rate has recently climbed down again from 5.3% to a little over 5%, so that will improve affordability; the typical monthly mortgage payment is up at approximately $600 year-over-year as of April. Meanwhile, single-family housing starts are not ramping up since developers are shifting building efforts toward multifamily rentals amid rent growth of over 10%, which yields a real return over the 8% inflation rate.

Prices are expected to rise at a slower pace over the coming months. NAR's data shows the year-over-year pace of appreciation of single-family homes on the market has slowed to 14.8% in April. So, expect the Case-Shiller index to also reflect this slower price appreciation in the April data. NAR expects the pace of price appreciation to moderate to about 6% by the end of 2022, although prices could continue to increase above this pace because construction costs are up about 18% year-over-year. More importantly, sellers have no incentive to sell at a loss or at a huge discount, much like they did during the Great Recession when homeowners in distress were forced to sell their homes. Housing demand may slow but there is less economic pressure for prices to fall or the pace of appreciation to slow significantly.

1 The 10-city index includes Boston, Chicago, New York, Washington DC, Miami, Las Vegas, San Francisco, San Diego, Los Angeles, and Denver.