Home prices were not only gaining in February, the gains were increasing steadily. Nationally, prices were 4.2% higher annually for the month, up from a 3.9% gain in January, according to the S&P CoreLogic Case-Shiller Home Price Indices released Tuesday.
The 10-City Composite rose 2.9% annually in February, up from 2.6% in the previous month. The 20-City Composite increased 3.5%, up from 3.1%.
Prices in February were fueled by strong homebuyer demand, tight supply and near record-low mortgage rates. While rates are still low, and supply is even lower, demand has fallen dramatically due to Covid-19 and the economic shutdown.
"Results for the month were broad-based, with gains in every city in our 20-City Composite; 17 of the 20 cities saw accelerating prices," said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
Price gains continued to be strongest in Phoenix, Seattle, Tampa and Charlotte. In February, Phoenix home values were up 7.5% year over year, followed by Seattle with a 6% increase, and Tampa and Charlotte with 5.2% increases. Chicago, New York and Dallas saw the smallest annual price gains at 0.7%, 1.5% and 2.5% respectively.
Of course there's a caveat to all of this.
"Importantly, today's report covers real estate transactions closed during the month of February, and shows no signs of any adverse effect from the governmental suppression of economic activity in response to the COVID-19 pandemic," said Lazzara. "As much of the U.S. economy was shuttered in March, next month's data may begin to reflect the impact of these policies on the housing market."
While most analysts do not expect home prices to fall nationally, as they did following the subprime mortgage crisis, price gains are likely to weaken along with home sales. Sales of both new and existing homes started to drop in March and likely fell very sharply in April.
Some markets whose economies are hardest hit, especially those that depend on leisure and hospitality, could see prices fall. Those include Las Vegas and Orlando, which are already seeing deep drops in home sales.