The average price of a home is surging in cities across the U.S., with places like Phoenix, Tampa and Miami seeing an especially sharp jump.
Home prices in 20 major cities rose 19% in January from a year ago, according to the latest S&P CoreLogic Case-Shiller Index. Residential real estate costs have continued to climb because of a shortage of homes on the market and pent-up demand from buyers as COVID-19 loosens its grip on the U.S.
Rising home prices andcould price millions of Americans out of the market, experts say.
"Home prices remain close to all-time highs, which is impacting affordability," Rubeela Farooqi, chief U.S. economist with High Frequency Economics, said in a report. "Overall, a lack of supply that is lifting prices remains a headwind for home sales."
In Phoenix, Arizona, home prices jumped nearly 33% between January 2021 and January 2022, according to the Case-Shiller data. The average price of a home in the state is now more than $400,000. Prices in Tampa, Florida, rose nearly 31% over that period, while in Miami they rose 28. The average home in Tampa and Miami now costs more than $375,000 and $480,000, respectively, according to Zillow.
Other cities seeing a significant increase in home prices include San Diego, California (27%); Charlotte, North Carolina (24%); and Atlanta, Georgia (22%), according to Case-Shiller.
The rapid increase in home prices during thehas pushed the beyond the means of many middle-class Americans, who must compete against investors and higher-income buyers.
Home loans are also getting more expensive as the Federal Reserve begins to Bankrate. That means higher monthly payments for a new home.. The average rate for a 15-year mortgage has risen to 3.8% and 4.5% for a 30-year mortgage, according to
Some analysts expect mortgage rates to keep climbing. "With long-term Treasury yields set to head higher, mortgage rates will go higher still in the near term," Tan Kai Xian, U.S. analyst with Gavekal Research, said in a report.
As mortgage rates rise, meanwhile, more buyers are taking out— one of the financial products blamed for the 2006 housing crisis.
The reason there are fewer houses on the market is that construction companies aren't building homes fast enough to keep up with demand, economists said. Builders completed construction of 1.3 million homes in February, nearly 3% fewer compared to February 2021, according to the government housing data.
Labor shortages, along with the rising cost of building materials due to ongoing global supply-chain issues, are also slowing construction of new homes, according to PNC Financial Services Group senior economist Abbey Omodunbi.
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