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Home prices surged in March and it could mean that price declines are over, S&P says

May 30, 2023, 23:11 IST
Business Insider
(Photo by Joe Raedle/Getty Images)
  • US home prices saw a 1.3% nationwide monthly increase and a 0.4% adjusted increase in March.
  • That's a sign that home price declines could be over, S&P said in a statement.
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Home prices increased for the second straight month in March — a sign that the home price declines that sparked worry in 2022 could be over, S&P Dow Jones Indices said.

US home prices saw a 1.3% nationwide increase and an adjusted 0.4% monthly increase in March, according to the S&P CoreLogic Case Shiller US National Index.

That's slightly faster than the growth seen in February, when home prices saw a 0.2% overall and adjusted month-over-month increase.

Meanwhile, S&P's 20-city home price index saw a 1.5% unadjusted monthly increase and a 0.5% adjusted gain, with prices up in all 20 major cities the S&P tracked in March, versus just 12 of the 20 cities in February.

In addition, home prices in all 20 cities saw a faster pace of growth in March than in February.

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"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," S&P Dow Jones Indices managing director Craig Lazzara said in a statement on Tuesday. "That said, the challenges posed by current mortgage rates and the continuing possibility of economic weakness are likely to remain a headwind for housing prices for at least the next several months."

That comes amid a precarious time for US housing, with experts warning that the market is in a state of limbo as high mortgage rates sideline buyers.

The high cost of borrowing and low demand have led home prices to fall for most of the past year, but Redfin economists have predicted that home prices will hit a trough in June of this year.

Still, affordability is unlikely to get much better anytime soon: Mortgage rates, which are influenced by real interest rates in the economy, just passed 7% for the first time since March, as markets are expecting the Federal Reserve to keep interest rates high to combat inflation.

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