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U.S. home prices are sending mixed signals.
At the national level, home prices are steadily creeping up. That runs counter to what is happening in more than half of the nation’s most populous areas, where pricing is falling back to pre-pandemic norms.
Compared to the year before, housing prices in March were up 0.7 percent, according to the S&P Cotality Case-ShIller U.S. National Home Price NSA Index. However, that annual growth rate was slightly under that of the month before, which was 0.8 percent.
Home price growth continues to lag inflation for the 10th straight month. In March, the Consumer Price Index was 2.6 percentage points above the 0.7 percent annual gain of the home price index, chipping away at properties’ true values.
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The national trend masks what is occurring among the country’s top markets, where pricing fell year-over-year in 10 of the 19 major metropolitan areas. Seattle recorded the greatest annual drop, of 2.5 percent, followed by several Sun Belt, pandemic-era boom markets, including Tampa, Dallas and Phoenix. These markets saw prices and sales surge a few years ago, but that frenzy has cooled as activity returns to typical levels. Homeowners there are also contending with some of the nation’s steepest increases in insurance and property taxes.
Meanwhile, several Northeast and Midwest cities, where demand has remained steadily strong, fared well. Chicago remained the leader, posting a year-over-year increase in housing prices of 6.1 percent. New York followed, with annual pricing gains of just over 4 percent. Cleveland, Boston and Minneapolis also recorded year-over-year increases.
Home prices are climbing as the nation continues to face a housing shortage, especially for lower- and middle-income families. Still, more deals this spring headed into contract thanks to improved inventory. But many of the homes hitting the market are still not in line with what many buyers are able to afford, according to a recent analysis by the National Association of Realtors and Realtor.com.