United States: Home prices continue to heat up in March
May 29, 2018
Home prices continued an upward trend in March, with the S&P/Case-Shiller 20-city composite home price index increasing 1.0% on a month-on-month basis. March’s print was an acceleration from the 0.7% increase recorded in February and overshot market expectations of a more modest 0.5% rise. When adjusted for seasonal factors, house prices grew 0.5% from the previous month in March, easing from the 0.8% uptick logged in February and falling short of market expectations of 0.7% growth.
On a year-on-year basis, home prices rose 6.8% in March, matching February’s three-and-a-half-year high. West Coast cities continued to drive the expansion, with Seattle, Las Vegas and San Francisco posting double-digit price growth. Seattle was the city with the fastest price growth for the nineteenth consecutive month. 12 of the 20 cities in the index experienced higher prices in March. Similar to last month’s results, Chicago and Washington logged the softest annual increases in prices.
Home prices are expected to continue to appreciate over the short term as sales continue to outpace inventory growth. Housing shortages are pushing up prices, particularly in West Coast markets. Moreover, strong economic growth and higher wages should continue to fuel real estate demand. That said, rising mortgage rates alongside higher home prices could price buyers out of the market and weigh on demand.