If you are thinking of buying a new residence, you should take into account that house prices increased by 10 .8% in 2021, according to the US National Home Price Index. This is the largest increase ever recorded in the 34 years that the data has been taken and is well above the increase of 10 .4% than there was in 2020.
All regions of the country saw price increases last year, but the increases were strongest in the South and Southeast, each of these areas increased by more than 25%.
Phoenix, Tampa and Miami reported the largest annual increases among the 20 cities in the index in December. Phoenix ranked first for the 31st month in a row with prices 32.5% higher than the previous year. It was followed by Tampa with an increase of 29.4% and Miami, with an increase of 27.3%.
“We continue to see very strong growth at the city level. The 20 cities saw price increases in 2021, and prices in 20 are at their all-time highs,” said Craig J. Lazzara, CEO of S&P Dow Jones Indices.
During the last few months, home prices have been rising at very high rates, albeit slowing down, Lazzara said. But that slowdown stopped in December. And it is that, after reaching a maximum of 20.8% in August, the annual increase in prices decreased to 18.8% in November, where it remained in December.
Month to month, prices of housing in the US National Index, increased 1.3% in December from November, after seasonal adjustment.
Lazzara said that the strength of the US housing market is being driven, in part, by people who decided to move during the pandemic.
Home inventory fell to levels record lows in December, according to a recent report from the National Association of Realtors. And in the face of continued strong demand, prices rose.
However, rising mortgage rates could start to stifle some of that demand, Lazarra said. “In the short term, we should soon start to see the impact of rising mortgage rates on home prices.”
Mortgage rates, which had risen only gradually since August, began to rise sharply in late December and have since risen to almost 4% for a fixed-rate mortgage at 30 years.
The highest mortgage rates have added more than $200 dollars at the monthly cost of a typical home for sale since December 2020, when rates were at their lowest historical. More than half of this increase has occurred in the last eight weeks.
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