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US housing market: 2022 opens with a 19.2% house price surge

House prices in the U.S. rose even further by January-end, increasing 19.2% year over year, based on the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.

The increase was "the fourth-largest reading in 35 years of history," according to S&P Dow Jones Indices Managing Director Craig Lazzara, and a stronger price hike compared to the previous month's 18.9% growth. The index was up 1.6% from the previous month after seasonal adjustment.

Price surge in cities continues

The 20-City Composite index posted a 19.1% year-over-year growth in January, up from 18.6% in the prior month. The 10-City Composite index rose 17.5% year over year, compared to the previous month's growth of 17.1%.

Lazzara noted that the strength in home prices was "broadly based." In January, all cities covered in the 20-City Composite index posted annual price hikes, 16 of which had higher year-over-year price growth than their respective gains in December 2021.

Phoenix had the highest house price growth, with a 32.6% year-over-year increase in January. Tampa, Fla., and Miami followed, with annual price hikes of 30.8% and 28.1%, respectively.

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Legacy Housing, Comstock lead homebuilder stocks

Legacy Housing Corp. topped the homebuilder stocks as of March 28 with a 21.7% one-year total return, way above the negative 16.0% median return across all U.S. homebuilders. In the 12 months ended Sept. 30, 2021, the company sold a total of 3,066 homes, a 10.2% decline from the previous year.

Apart from Legacy Housing, Comstock Holding Cos. Inc. also reported a positive one-year total return at 8.9%.

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Sales are down, starts are up

New single-family home sales in the U.S. dropped 2.0% on a monthly basis in February to a seasonally adjusted annual rate of 772,000 units, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. On an annual basis, new home sales fell 6.2%.

During the same period, existing-home sales experienced a bigger drop, declining by 7.2% from the previous month, according to the National Association of Realtors. However, compared to the previous year, existing-home sales were down only 2.4%.

On the other hand, privately owned, single-unit housing starts rose 5.7% month over month in February and were up 13.7% on a yearly basis.

In a March 18 press release, National Association of Realtors Chief Economist Lawrence Yun highlighted housing affordability as a major setback for homebuyers, noting that the continued price hikes and rising mortgage rates are keeping buyers from purchasing properties. "Some who had previously qualified at a 3% mortgage rate are no longer able to buy at the 4% rate," Yun said.

Yun expects house price hikes to slow down "as demand cools and as supply improves somewhat due to more home construction."

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S&P Dow Jones Indices and S&P Global Market Intelligence are owned by S&P Global Inc.