The January 2022 Home Data Index Market Report (HDI) has been released by Clear Capital—a Nevada-based property valuation management and data solutions company—which shows that the average American home increased in value by 3.4% over the previous quarter.
According to the report, home prices are now up 19.5% year-over-year on average.
This is a slight slowdown in pace from the 3.9% appreciation seen in December when home price appreciation stood at 19.9% annually.
The largest growth was seen in the South, where prices are up 4.6% (down from 6%) on average quarter-over-quarter. Also this quarter properties in the West appreciated by 3.2% (down from 5.8%); the Midwest appreciated by 1.9% (down from 4.8%); and the Northeast grew by 2.9% (down from 3.9%).
The highest performing major metropolitan area tracked by the report was Raleigh, North Carolina, where the average home price went up by 6.7% since last quarter and now stands at a 32.7% increase year-over-year. The Miami, Florida metropolitan area saw similar growth as homes values also went up 6.7% for a 23.5% increase since last year. Coming in third, Tampa, Florida, saw quarterly growth increase by 6.4% or 31.7% over last year.
The western region of the country was the fastest growing region of the country again in January. The city with the highest annual growth rate was once again Phoenix, as prices rose 38% on a year-over-year basis compared to the 39% growth rate seen last month.
“The Federal Reserve maintained the current level of interest rates at the January FOMC meeting but set the stage for rate hikes starting in March,” said Brent Nyitray from the Daily Tearsheet. “The Fed has been buying Treasuries and mortgage-backed securities since the early days of the COVID-19 pandemic, and it looks like the Fed will try and unwind the buildup going forward.”
“As the Fed prepares to take away the punch bowl, stock market valuations have started to decrease, and residential real estate analysts are taking down their estimates for 2022 home price appreciation,” Nyitray continued. “Freddie Mac is forecasting home price appreciation to slow to 6.2% in 2022 and fall even further to only 2.5% in 2023.”
Nyitray went on to say that the main driver of home prices this year will continue to be issues with supply and demand. Inventory hit a record low in December with only 910,000 units on the market, representing a 1.8 months’ supply (a six-month supply is considered normal).
“While the Fed’s actions will probably take some froth off the housing market, residential real estate is still one of the go-to assets in an inflationary environment as it generally will outperform other assets like stocks and bonds,” Nyitray added.