The 2021 home price uptick of +18.8% y/y was a huge jump from 2020’s increase of +10.4%.
Biggest Home Price Increase in History of S&P CoreLogic Case-Shiller Index
2021’s home price increase of nearly +20% – +18.8% to be exact – was the largest home price bump in the 34-year history of the S&P CoreLogic Case-Shiller Index.
Craig Lazzara, managing director with the S&P DJI, stated in a message, “This is the highest calendar year increase in 34 years of data and substantially ahead of 2020’s +10.4% gain.”
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Strong Price Growth in Cities
The S&P 20-City Composite that tracks price growth in 20 major US cities recorded home price growth at +18.6% in December 2021, up from +18.3% in November.
Lazzara said, “All 20 cities saw price increases in 2021, and prices in all 20 are at their all-time highs.”
Cities included in the 20-City Composite with the largest price growth included:
- Phoenix – +32.5%
- Tampa – +29.4%
- Miami – +27.3%
Reasons for Price Upticks
As industry experts have been saying for the two years since the pandemic blew apart home prices, home price growth has been driven by low mortgage rates, low housing supply, and the push to relocate in newly popular markets by remote workers who’ve been untethered from dense, less affordable urban areas.
Selma Hepp, deputy chief economist with CoreLogic, added, “Buyers may have been rushing in anticipation of higher (mortgage interest) rates, though most recent data suggests that demand remains vigorous despite the 100-basis point increase in rates.”
Hepp also cautioned, “However, as rates continue to pick up, budget-constrained buyers will face more challenges, likely leading to some waning demand.”
Conclusions
Managing director S&P DJI Lazzara wrapped up the discussion of 2021’s largest home price increase by saying, “More data will be required to understand whether this demand surge simply represents an acceleration of purchases that would have occurred over the next several years rather than a more permanent secular change. In the short term, meanwhile, we should soon begin to see the impact of increasing more rates on home prices.”
Collaborative Conclusions from FHFA
Along with the CoreLogic S&P Case Shiller Index being released on Tuesday, February 22, the Federal Housing Finance Agency (FHFA) released its data on home prices. This FHFA data indicated that home prices jumped +17.5% in 2021, along with a +3.3% increase in home prices during Q4.
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Thanks to CoreLogic and Inman.
