US housing prices continue to rise this year. The average cost of a home shot up 19.8% between February 2021 and February 2022, according to the latest S&P CoreLogic Case-Shiller index, a closely monitored housing cost barometer.
The sharp rise in residential real estate prices during the economic recovery that began in 2020 after the initial outbreak of COVID-19 is pushing more middle-class Americans. outside the housing marketeconomists warn.
Prices are rising mainly because rising demand for housing far outstrips supply, and housing inventories are declining during the pandemic as builders withdrew construction. Builders completed construction of 1.3 million homes in February, nearly 3 percent less than last year, according to federal housing data.
As a result, house prices are likely to remain high until “there is a rebalancing of supply and demand,” in a report by Rubeela Farooqi, chief economist at U.S. High Frequency Economics.
According to Case-Shiller, housing costs are rising even more sharply in some parts of the US. Home prices rose nearly 33% in February from a year earlier in Phoenix, Arizona and Tampa, Florida. Miami home prices rose 30%. That raised the average price of a house in Phoenix to $ 459,000, according to Realtor.com. Typical Tampa and Miami homes cost $ 389,000 and $ 515.00, respectively.
Other cities that have seen a significant increase in home prices over the past year are San Diego, California (29%); Charlotte, North Carolina (25%); and Atlanta, Georgia (24%), according to Case-Shiller.
Another reason why house prices are rising is because some longtime homeowners have decided to stay as pandemic mola. Rising mortgage costs often drive home sellers to reduce their selling price to attract bidders.
"Older Americans who might otherwise have considered downsizing have been slow to act because of persistent fear of health care," said Bill Adams, chief economist at Comerica Bank. a report. "In addition, downsizing offers less cost savings than it would otherwise have, as housing prices and mortgage rates are much higher than before the pandemic."
Goldman Sachs economists noted that house prices rose 2.4% in January-February alone, the fastest monthly growth rate on record.
Relief on the horizon?
Homeowners may see some relief at the end of the year as a type of mortgage reach its highest level in years; while this increases property costs, it also usually leads to a softer demand for housing.
"The housing market remains insufficient and will be a sellers' market for a while, but demand should soften with rising mortgage rates, reducing the imbalance between supply and demand," the economist said. senior PNC Abbey Omodunbi in an email.
With the Federal Reserve now raising its benchmark interest rate, the average rate on a 30-year mortgage is now 5.2% and 4.4% on a 15-year loan, according to Bankrate.
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