By Anna Bahney
Overheated home prices continue to show signs of cooling off a bit.
Home prices rose 18.8% year-over-year in November, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. But that staggering jump was down from a 19.1% increase in October.
For the past several months, prices have continued to rise at a very high rate, but the increases have been getting smaller, said Craig J. Lazzara, managing director at S&P Dow Jones Indices.
Despite the deceleration, November’s gain was the sixth-highest in the 34 years covered by the index. The top five gains were notched in the months immediately preceding November.
“We continue to see very strong growth at the city level,” he said. “All 20 cities saw price increases in the year ended November 2021, and prices in 19 cities are at their all-time highs.”
Phoenix led all cities for the 30th consecutive month, with a 32.2% annual increase. Tampa was next, up 29%, followed by Miami, which saw prices up 26.6%. Las Vegas, Dallas, and San Diego rounded out the top five. Prices were strongest in the South and Southeast, which were both up 25% or higher, but every region of the country saw gains.
A persistent low inventory of homes amid strong demand has pushed prices higher. Newly constructed homes are coming, but a long-running shortage in supply in addition to the lasting effects of the pandemic mean that it will take years to meet demand.
“Increasing home prices will continue to be the norm as long as supply is restricted,” said Bill Dallas, president of Finance of America Mortgage.
But low inventory shouldn’t deter those looking for for a home right now, since mortgage rates will rise throughout the year, he said.
“Homebuyers still have a few reasons to be optimistic in the near-term,” Dallas said.
Higher prices and rising interest rates may push some homeowners sitting on the sidelines to put their house on the market, Dallas said.
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