Double-digit annual price gain was the fourth-largest reading in 35 years

Home price growth ended 2021 on a high note and entered 2022 with even bigger gains across all composites.

The latest S&P CoreLogic Case-Shiller Index showed that home prices nationwide increased 1.6% month over month and increased by 19.2% year over year in January. Although home price growth had decelerated in the past couple of months, the 19.2% annual increase was the fourth-largest reading in 35 years of the index’s history.

“Home price changes in January 2022 continued the strength we had observed for much of the prior year,” said Craig Lazzara, managing director at S&P DJI. “Last fall, we observed that home prices, although continuing to rise quite sharply, had begun to decelerate. Even that modest deceleration was on pause in January.”

The 10- and 20-City Composites both posted gains in January. The 10-City Composite was up 1.8% month over month and 17.5% year over year on a seasonally adjusted basis. The 20-City Composite also rose 1.8% month over month and was up 19.1% from a year ago.

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“The strength in home prices continues to be very broadly based. All 20 cities saw price increases in January 2022, with prices in 16 cities accelerating relative to December’s report. January’s price increase ranked in the top quintile of historical experience for 19 cities and in the top decile for 17 of them,” Lazzara said.

Phoenix (+32.6%), Tampa (+30.8%), and Miami (+28.1%) registered the highest annual gains among all the cities.

According to Lazzara, global economic uncertainties and rising mortgage rates will soon affect home prices.

“The macroeconomic environment is evolving rapidly. Declining COVID cases and a resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response,” Lazzara said. “We may soon begin to see the impact of increasing mortgage rates on home prices.”