U.S. Home Prices Continued to Climb in February

By Nicole Friedman

Home-price growth accelerated to a new 15-year high in February, as homebuying demand remained strong and the number of homes for sale held near a record low.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 12% in the year that ended in February, up from an 11.2% annual rate the prior month. February marked the highest annual rate of price growth since February 2006.

Also on Tuesday, the Commerce Department reported that the homeownership rate inched higher to 65.6% in the first quarter, up from 65.3% a year earlier and slightly down from 65.8% in the fourth quarter. For households headed by someone under 35 years old, a key source of homebuying demand, the homeownership rate rose to 38.1% from 37.3% a year earlier.

Demand for homes has surged in the past year as mortgage interest rates held near record lows. Sales of previously owned homes, which make up the bulk of the housing market, rose in 2020 to their highest annual level since 2006, according to the National Association of Realtors.

The supply of homes for sale fell to a record low in January and stayed at that level in February, NAR said. Mortgage-finance company Freddie Mac recently estimated that the U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country's demand.

The Case-Shiller 10-city index gained 11.7% over the year ended in February, compared with a 10.9% increase in January. The 20-city index rose 11.9%, after an annual gain of 11.1% in January. Price growth accelerated in 19 of the 20 cities.

"These data remain consistent with the hypothesis that COVID has encouraged potential buyers to move from urban apartments to suburban homes," said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, in a statement.

Economists surveyed by The Wall Street Journal expected the 20-city index to gain 11.7%.

Phoenix had the fastest home-price growth in the country for the 21st straight month, at 17.4%, followed by San Diego at 17%.

A separate measure of home-price growth by the Federal Housing Finance Agency also released Tuesday found a 12.2% increase in home prices in February from a year earlier, a record in data going back to 1991.

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(END) Dow Jones Newswires

04-27-21 1038ET