Home-Price Growth surged in January

Home price growth increased in January with the supply of homes for sale falling to a new low. Home prices increased to a record pace in 2021, and are continuing to climb this year as the demand strongly outpaces the supply of homes for sale. This is causing competition among the buyers, which results in bidding wars and many homes get sold above their list price. 

The home inventory slid to the lowest level on record at the end of January since 1999. As mortgage rates started increasing, buyers rushed to make purchases in January, because they expected that the rates would continue to rise.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan cities nationwide, rose 19.2% compared with an annual gain of 18.9 % in the previous month.

Mortgage interest rates also continued to climb to their highest level since 2019. The Federal Reserve signalled additional increases to come with the benchmark federal-funds rate this month. 

The rising home prices and interest rates are making it unaffordable for buyers. A separate measure of home-price growth by the Federal Housing Finance Agency has also released that it found an 18.2% increase in home prices in January from a year ago.