Home prices rose for the second straight month in March as buyers confronted steep competition and limited inventory.
Prices increased 0.7% nationally in the period from February to March, the S&P CoreLogic Case-Shiller index showed Tuesday. On an annual basis, prices are down just 3.6% from their peak in June 2022, according to the index.
"The modest increases in home prices we saw a month ago accelerated in March 2023," said Craig Lazzara, managing director at S&P DJI, in a release. "Two months of increasing prices do not a definitive recovery make, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end."
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The 10-city composite, which encompasses Los Angeles, Miami and New York, fell 0.8% annually, compared with a 0.5% increase in February. The 20-city composite, which also tracks housing prices in Dallas and Seattle, fell 1.1% in March, following a gain of 0.4% the previous month.
There was a major discrepancy in the price gains in the 20 cities: Miami saw a 7.7% annual gain, making it the best-performing city for the eighth straight month. Tampa, meanwhile, posted a 4.8% increase, followed by Charlotte, N.C., with an increase of 4.7%.
Conversely, cities in the West posted some of the biggest declines: Seattle prices plummeted 12.4%, edging out San Francisco with its 11.2% decline.
"Home prices continue to rise with low inventory plaguing the market, despite high mortgage rates and widespread unaffordability," said Nicole Bachaud, Zillow senior economist. "However, on an annual level, prices are still recovering from pandemic-era highs."
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The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest ongoings in the market.
The interest-rate-sensitive housing market entered a deep freeze last year in the wake of the Federal Reserve's aggressive interest-rate hike campaign.
But as mortgage rates have slowly declined from a peak of 7% – and as buyers grapple with limited inventory – the housing market has shown early signs of stirring back to life.
A separate report released last week showed the National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, rose five points to 50, the highest reading since July.
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It marked the first time in nearly a year that the index pulled out of negative territory.
"New home construction is taking on an increased role in the marketplace because many homeowners with loans well below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level," said Alicia Huey, NAHB chair and a custom home builder and developer from Birmingham, Alabama.
