US Home Prices Rocket In February For Strongest One-Month Increase In 2 Years: Real Estate Stocks React
U.S. residential home prices accelerated in February.
Prices defied the gravitational pull of high mortgage costs and surpassed analysts’ expectations as reduced supply and robust economic momentum continued to drive up property valuations.
U.S. house prices saw a 1.2% month-over-month growth in February 2024, the largest increase in a single month since April 2022, significantly outpacing expectations of a 0.1% growth, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI).
Home Prices ‘Rebounded’
Across the nine census divisions, the seasonally adjusted monthly price changes from January 2024 to February 2024 ranged from a 0.4% growth in the West South Central division to a 3.0% growth in the New England division.
For the broader country, single-family house prices increased by 7% from February 2023 to February 2024, marking the highest one-year increase since November 2022. All census divisions reported positive 12-month changes, ranging from 3.7% in the West South Central division to 10.8% in the Middle Atlantic division.
Dr. Anju Vajja, deputy director for FHFA's division of research and statistics, noted, "U.S. house prices rebounded with an increase in February, after declining slightly in January.
| Region | FHFA HPI (MoM Chg) | FHFA HPI (YoY Chg) |
| U.S. | 1.2% | 7.0% |
| Pacific | 1.3% | 6.6% |
| Mountain | 0.4% | 4.4% |
| West North Central | 1.1% | 7.3% |
| West South Central | 0.4% | 3.7% |
| East North Central | 0.9% | 8.9% |
| East South Central | 1.2% | 4.9% |
| New England | 3.0% | 10.5% |
| Middle Atlantic | 2.6% | 10.8% |
| South Atlantic | 1.4% | 7.1% |
Separately, S&P Global released a report Tuesday, tracking the 20-city home price index. It revealed a similar trend nationwide:
- Prices up 7.3% year-on-year, the highest since October 2022 and surpassing expectations of a 6.7% increase.
- San Diego (11.4%), Chicago (8.9%), and Detroit (8.9%) saw the largest one-year price increases.
- 19 of the 20 markets saw month-on-month increases; San Diego (1.7%), San Francisco (1.7%), and Portland (1.2%) recorded the sharpest rises
- The Tampa housing market was the only one to experience a decrease.
All-Time Highs
Brian D. Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, remarked, "Following last year's decline, U.S. home prices are at or near all-time highs. Our National Composite rose by 6.4% in February, the fastest annual rate since November 2022. Our 10- and 20-City Composite indices are currently at all-time highs. "
He added, "San Diego has been the best-performing market following the trough in home prices observed in early 2023. With Los Angeles rising for 13 consecutive months to record another new high, Southern California has outperformed its surrounding neighbors."
Market Reactions: Real estate stocks, as tracked by the Vanguard Real Estate ETF (NYSE:VNQ), inched 0.8% lower on Tuesday, weighed down by a broader negative sentiment on Wall Street as traders took a more cautious stance ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting.
NexPoint Residential Trust (NYSE:NXRT), Redfin Corporation (NYSE:RDFN), LTC Properties, Inc. (NYSE:LTC), Kite Realty Group Trust (NYSE:KRG) and Brixmor Property Group Inc. (NYSE:BRX) recorded the daily largest gains, ranging from 1.7% to 3.5%.
Conversely, SBA Communications Corporation (NYSE:SBAC), The Macerich Company (NYSE:MAC), Sun Communities, Inc. (NYSE:SUI), Orion Office REIT Inc. (NYSE:ONL) and Opendoor Technologies Inc. (NYSE:OPEN) posted the widest daily losses ranging from 6.2% to 3.3%.
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