“Housing is in this recession, and the rest of the economy is booming,” Redfin CEO has said

“Housing is in this recession, and the rest of the economy is booming,” Redfin CEO has said.

Home prices in the U.S. surged by 6.4% in February compared to a year earlier, outpacing the previous month's 6% annual increase. This marks the fastest growth rate since November 2022, continually breaking past the record highs set last year on a seasonally adjusted basis.

The increase is particularly pronounced in major cities, with prices in 10 major cities rising by 8% year-over-year, up from January's 7.4% increase. Similarly, prices in 20 major cities jumped 7.3%, compared to a 6.6% annual gain in January. According to Case-Shiller data, both indices are currently at all-time highs.

San Diego reported the highest price hike at 11.4% from last year, followed by Chicago and Detroit with an 8.9% rise. In contrast, Portland recorded the slowest annual increase at 2.2%.

All cities in the index reported annual price increases, with four cities—San Diego, Los Angeles (8.7%), Washington D.C. (7.1%), and New York (8.7%)—reaching all-time highs.

Despite economic uncertainty, U.S. home prices continue to rise, fueled by enthusiasm for potential Fed cuts and lower mortgage rates, according to Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices.

Even as mortgage rates have climbed to their highest level since November, persistent demand and limited housing supply are driving home values upward. Redfin's report last week indicated that while new listings are up 10.2% year-over-year, this growth may slow as rising mortgage rates reinforce the lock-in effect. This effect occurs when homeowners choose to keep their existing low-rate mortgages rather than selling and buying homes at higher rates. The report also shows that demand for housing, as measured by Redfin's Homebuyer Demand Index, is at its highest level in about eight months. As prices remain buoyed by low inventory and strong demand, overall housing costs are likely to stay elevated for the foreseeable future, according to Redfin Economic Research Lead Chen Zhao.