By Nathalie Voit
Home prices in November climbed 18.8% year-over-year, slightly down from October’s 19.0% red-hot reading but still posting record annual gains, S&P Case-Shiller said Jan. 25 in its monthly National Home Price Index.
The 10-City Composite Index, which tracks changes in residential real estate value across ten major metro areas, jumped 16.8% in the twelve months leading through November 2021, down from 17.2% in October. According to November’s report, the 20-City Composite grew 18.3%, down from 18.5% in the previous month.
Among the 20 cities analyzed in the index, Phoenix, Tampa, and Miami reported the highest annual home-price gains.
Phoenix took the top spot for the highest year-over-year increase, coming in at a staggering 32.2%. Tampa followed suit, posting a 29% gain. Miami came in third, reporting 26.6% home price growth over the year.
Eleven of the twenty cities listed in the index ended November 2021 with higher real estate prices than the previous month, the report said.
“For the past several months, home prices have been rising at a very high, but decelerating, rate. That trend continued in November 2021,” said Craig J. Lazzara, Managing Director at S&P DJI.
“Despite this deceleration, it’s important to remember that November’s 18.8% gain was the sixth-highest reading” in the history of the index (the top five were the months immediately preceding November), he said.
According to Lazzara, rising mortgage rates prompted by the Fed’s tight monetary policy are poised to dampen housing demand soon and therefore bring down home prices.
“We should soon begin to see the impact of increasing mortgage rates” on the housing market, Lazzara said in the report.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic. More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred over the next several years or reflects a more permanent secular change,” he added.