Home prices surge 20.4% in April, largest annual gain on record

According to S&P CoreLogic's national home price index, home prices surged 20.4% annually in April.

The 10 city composite index was up 19.7% on an annual basis, up from 19.5% in the previous month, and the 20 city composite index posted a 21.2% year-over-year gain, up from 21.1% in the previous month and the largest annual gain on record.

The U.S. national index posted a 2.1% month-over-month increase in April, while the 10 city and 20 city composite indexes posted gains of 2.2% and 2.3% in April. After a seasonal adjustment, the U.S. national index posted a month-over-month bump of 1.5%, and the 10 city and 20 city composite indexes both posted increases of 1.8%.

Despite the deceleration of the national index and modest acceleration for the 10 and 20 city composite indexes, S&P DJI Managing Director Craig Lazzara said that the housing market continues to show very broad strength, with all 20 cities notching double-digit price increases for the 12 months ending in April.

He said that mortgage rate financing has become more expensive as the Federal Reserve hikes interest rates to bring down inflation, a process that had only begun in April when the data was collected. The average commitment for a 30 year fixed-rate mortgage hit 5.81% last week, the highest level since November 2008, according to Freddie Mac.

Lazzara said that a more challenging macroeconomic environment may not support extraordinary home price growth for much longer.

Nine of the 20 cities reported higher price increases in the year ending April 2022 compared to the year ending March 2022. Tampa led the way for the second consecutive month with a 35.8% year-over-year price increase, followed by Miami with a 33.3% increase and Phoenix with a 31.3% increase.

The South and Southeast saw the highest increases in prices, 30.6% and 30.5%, respectively. The Midwest and Northeast saw double-digit gains of 13.8% and 14%.

The pending home sales rose by 0.7% in May, breaking a six month decline, according to the National Association of Realtors. NAR Chief Economist Lawrence Yun warned that the housing market is going to be undergoing a transition as contract signings fell 13.6% on an annual basis in May, despite the uptick on a monthly basis.