Home prices hit a new all-time high the previous month, marking the second consecutive month of record highs in April, the S&P CoreLogic Case-Shiller index said on Tuesday.
The closely watched 20-city index, which tracks home prices in major metropolitan areas, rose 1.4% unadjusted and 0.4% seasonally adjusted.
Home sales typically increase in the spring and summer, often driving up prices, so seasonal adjustments tend to downplay month-over-month increases.
Compared to a year ago, the index for the 20 cities is up 7.2%, outpacing the overall rate of inflation and putting housing out of reach for many Americans already struggling with steep price increases.
San Diego had the highest year-over-year home price growth, with prices up 10.3%. New York and Chicago rounded out the top three with increases of 9.4% and 8.7%, respectively. Portland was at the bottom of the list, with prices up just 1.7% over the past 12 months.
The national home price index rose 1.2% unadjusted and 0.3% after seasonal adjustment. The 10-city index, which covers major cities and their surrounding areas, rose 1.4% unadjusted and 0.5% after seasonal adjustment.
Compared to the previous year, the national index rose 6.3%, while the 10 city index rose.
The Federal Reserve began raising interest rates in the spring of 2022, pushing mortgage rates to a 30-year high. Typically, high mortgage rates put pressure on home prices, but in this economic cycle, home prices have been surging despite high and rising interest rates. The main reason for this appears to be that many homeowners are reluctant to sell their current homes, as selling would require them to exchange lower-priced mortgages for higher-priced mortgages, resulting in a smaller supply of existing homes for sale.
That’s pushing up home prices and complicating the Fed’s campaign to curb inflation. Major inflation measures don’t include home prices directly because home purchases are considered investments, not consumption. But rising home prices tend to push up rents, and so does a measure called “owner rent equivalent,” which is included in inflation equivalent figures.
The average interest rate on a 30-year fixed mortgage was 6.99% in April, the highest monthly average since November.
