Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: S&P CoreLogic Case Shiller Home Price Index Accelerates to 19.8% in February 2022

Home prices rose at a surprising, accelerated pace of 19.8% year-over-year in the past three months as of February, remaining robust in the face of rising mortgage rates, according to the latest S&P CoreLogic Case Shiller National Index. In 14 out of the 20 metro areas, home prices for single-family homes rose over 20%, with searing rates in Phoenix, (32.9%), Tampa (32.6%), and Miami (29.7%).

To note, the index reflects sales transactions over the past three months of December 2021 through February 2021, so these transactions transpired when 30-year mortgage rates were still below 4%. Mortgage rates hit over 5% last week.

However, the rapid pace of price appreciation indicates that demand is still heavily outweighing supply and that we are still in a seller's market. The data lends credence to the argument that homebuyers are trying to lock in at current mortgage rates before rates rise further (to as high as 6%) by year-end. According to REALTORS®, homes that sold in March had an average of five offers.

Currently, at the median sale price of $375,300 and with a mortgage rate of 5.11% and a 10% down payment, the monthly mortgage is $1,851. By December, with home prices just up 5% year-over-year and mortgage rates at 6%, the monthly mortgage payment rises to $2,025.

Even as about 2.6 million renter households headed by 25 to 44-year-old persons have been priced out (at a mortgage rate of 5.11% relative to 3% on a $375,300 home), there are still 6.3 million renter households who can afford a home, with incomes of above $88,800.

However, expect prices to slow during the year as affordability takes a bigger hit from higher mortgage rates. Households are facing not only higher mortgage payments but also facing $500 more on expenditures excluding shelter with inflation at 8.5%. All told, households need about $1,000 more now than one year ago just to be able to afford a home and spend on the same type of consumer goods and services.

Will the pace of appreciation hit negative territory? Not likely, as supply conditions are still tight, with the inventory of homes for sale at just about two months' supply given the current sales pace.