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Home-price gains accelerated in February for the 70th consecutive month, creating increasingly challenging conditions for buyers as interest rates also rise and inventory remains tight.
The S&P CoreLogic Case-Shiller National Home Price Index, which covers the entire nation, rose 6.3% in February, up from a 6.1% year-over-year increase reported in January.
The 10-city index gained 6.5% over the year, up significantly from 6% the prior month. The 20-city index gained 6.8%, up significantly from 6.4% the previous month. Economists surveyed by The Wall Street Journal had expected home-price growth to decelerate in February, with the 20-city index gaining 6.3%.
“With expectations for continued economic growth and further employment gains, the current run of rising prices is likely to continue,” said David Blitzer, managing director at S&P Dow Jones Indices.
Prices have risen for 70 consecutive months since May 2012, with annual increases averaging 6% over that time, Mr. Blitzer said. That compares to the previous housing boom, when price rose for 182 consecutive months from January 1992 to February 2007 and gains averaged 6.1%. That suggests strong price gains could have plenty of runway left.
Home-price gains accelerated in 2017 compared with 2016. Nonetheless, economists expected the pace of price growth to slow this year, due to a new tax law enacted in late December that reduced the incentive for homeownership, as well as rising mortgage rates that make owning a home less affordable.
Affordability challenges and the shortage of inventory are dampening home sales. Existing-home sales increased 1.1% in March from a month earlier but declined compared with a year earlier, the National Association of Realtors said Monday.
Markets that are seeing the steepest increases remain concentrated in the West. Seattle reported the largest annual gain, at 12.7%, followed by Las Vegas at 11.6% and San Francisco saw a 10.1% gain.
Month-over-month, the U.S. Index rose 0.4% in February before seasonal adjustment, while the 10-city and the 20-city index both rose 0.7% from January to February.
After seasonal adjustment, the national index rose 0.5% month-over-month. The 10-city index and the 20-city index both rose 0.8%. All 20 cities saw price increases in February before and after seasonal adjustment.
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