Home Prices Rose by 3.1%, Most in Almost a Year Before Virus

U.S. home price growth was showing signs of acceleration in January, a sign of the solid demand that existed before the coronavirus outbreak caused millions of job losses and tossed the U.S. economy into a likely recession.

The S&P CoreLogic Case-Shiller 20-city home price index rose 3..1% in January from a year ago, the most in nearly a year and up from a 2.8% annual gain in December, according to a Tuesday report.

Lower mortgage rates and solid job gains had been fueling interest from would-be homebuyers, but the housing market is now in a moment of tumult as the virus-induced downturn has led to fears of missed mortgage payments.

Phoenix posted the strongest annual price growth at 6.9%, followed by Seattle and Tampa at 5.1%.

Key Insights

• Mortgage rates, already near three-year lows, could decline further in conjunction with the latest drop in U.S. Treasury yields. Cheaper financing costs will likely underpin demand in a market constrained by lean inventory, leading to further home-price appreciation.
• A separate gauge from the Federal Housing Finance Agency, which tracks repeat sales and derived from conforming loans, showed home prices climbed 0.6% in December from the previous month, the most since September, and were up 1.3% in the fourth quarter.
• Prices in all 20 cities increased in the year through December, led by Phoenix; Charlotte, North Carolina and Tampa, Florida.
• National U.S. home prices increased 3.8% in December from a year earlier, the strongest annual advance since February.

This report uses material from the AP and Bloomberg.