Home prices on the rise

Home prices rising. 1% listing

In February, U.S. home prices experienced a significant surge, marking the most substantial increase in nearly two years, as reported by federal housing authorities on Tuesday. This spike underscores the persistent impact of limited housing supply on the nation's real estate market.

According to the Federal Housing Finance Agency's monthly report on home prices, prices rose by 1.2% from January, marking the largest month-to-month growth since April 2022. On a year-over-year basis, prices soared by 7%, representing the sharpest increase since November 2022.

Anju Vajja, deputy director for FHFA's division of research and statistics, highlighted the rebound in U.S. house prices in February, following a slight decline in January. Vajja noted that all nine census divisions experienced price appreciation over the past 12 months, with New England and the Middle Atlantic divisions showing double-digit growth.

Although the supply of homes on the market has seen gradual improvement in recent months, it remains significantly below historical norms. This shortage persists because many homeowners secured mortgages with low interest rates before the Federal Reserve initiated its rate-hike cycle over two years ago. The prospect of financing new homes at rates exceeding 7% for a 30-year fixed-rate mortgage deters many homeowners from relocating or upsizing, contributing to the limited supply.

Furthermore, the sluggish pace of home construction exacerbates the housing shortage, preventing new properties from entering the market. These factors collectively contribute to a national housing shortage and affordability challenge.

The surge in home prices in February may not be well-received by the Federal Reserve, which has encountered hurdles in its efforts to curb inflation in 2024. While home prices do not directly influence the inflation measures tracked by the U.S. central bank, they indirectly contribute to metrics such as imputed rents included in inflation indexes, which have remained persistently high.

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DRE: 01925601

Call: (949) 436-3936

LOS ANGELES / ORANGE COUNTY

[email protected] | payamhomes.com

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PAYAM SHIRAZI, Broker
DRE: 01925601

Call: (949) 436-3936

LOS ANGELES / ORANGE COUNTY

[email protected] | payamhomes.com