Price growth is leveling off as elevated mortgage rates strain buyer budgets, but prices are still at historic highs because there aren’t enough homes for sale.
U.S. home prices climbed 0.6% from a month earlier on a seasonally-adjusted basis in March, matching February’s 0.6% month-over-month gain. On a year-over-year basis, prices rose 7.3%, also little changed from the prior month’s 7% annual increase.
This is according to the Redfin Home Price Index (RHPI), which uses the repeat-sales pricing method to calculate seasonally adjusted changes in prices of single-family homes. The RHPI measures sale prices of homes that sold during a given period, and how those prices have changed since the last time those same homes sold. It’s similar to the S&P CoreLogic Case-Shiller Home Price Indices but publishes more than one month earlier. March data covers the three months ending March 31, 2024. Read the full RHPI methodology here.
“Elevated mortgage rates are putting a cap on home price growth. Sellers can’t jack up prices like they did during the pandemic because buyer budgets are already constrained by 7% interest rates,” said Redfin Senior Economist Sheharyar Bokhari. “But while price growth is leveling off, prices remain at historic highs. That’s because a shortage of homes for sale—largely driven by the mortgage-rate lock-in effect—is buoying prices.”
Price growth may continue to stagnate in the coming months as mortgage rates stay high. The Federal Reserve recently warned that elevated inflation will probably delay the interest-rate cuts they had been planning this year.
Home prices fell from a month earlier in nine of the 50 most populous U.S. metropolitan areas: San Jose, CA (-1%), San Antonio (-0.8%), Fort Worth, TX (-0.6%), San Francisco (-0.5%), Fort Lauderdale, FL (-0.5%), Charlotte, NC (-0.5%), Orlando, FL (-0.3%), Indianapolis (-0.3%) and Minneapolis (-0.1%).
Prices rose most in Providence, RI (3.2%), Montgomery County, PA (2.5%), Nassau County, NY (2.4%), Milwaukee (1.7%) and Anaheim, CA (1.7%).
The table below includes the 50 most populous U.S. metro areas.
