Price surges in March as buyers face steep competition

The housing market experienced a strong surge in March, as buyers faced steep competition and limited supply.

Prices rose 0.7% in the period from February to March, according to the S&P CoreLogic Case-Shiller index. The index notes that prices are down just 3.6% from their peak in June 2022.

The 20-city Composite, which tracks housing prices in Dallas and Seattle, fell 1.1% in March, following a gain of 0.4% the previous month.

The price gains in the 20 cities were a significant discrepancy, as Miami saw a 7.7% annual gain, making it the best-performing city for the eighth consecutive month. In comparison, Tampa, N.C. posted a 4.8% increase, followed by Charlotte, N.C. with an increase of 4.7%.

In cities in the West, Seattle prices plummeted 13.4%, outpacing San Francisco by 11.2%.

Home prices continue to rise with low inventory affecting the market, despite high mortgage rates and widespread unaffordability, said Nicole Bachaud, Zillow's senior economist. On an annual basis, prices are still recovering from pandemic-era highs. The Case-Shiller index report with a two-month delay, which may not cover the latest ongoings in the market.

The housing market's interest-rate-sensitive housing market entered a deep freeze last year following the aggressive interest-rate hike campaign.

As mortgage rates have slowly declined from a peak of 7% and as buyers grapple with limited inventory, the housing market has shown early signs of stirring back to life.

A separate report released last week showed the National Association of Home Builders Wells Fargo Housing Market Index, measuring the pulse of the housing market, rose five points to 50, the highest reading since July.

It marked the first time the index has pulled out of negative territory in nearly a year.

New home construction is taking an increased role in the market because many homeowners with loans below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level, said Alicia Huey, NAHB chair and a custom home builder and developer from Birmingham, Alabama.