By Simon Bratt @

Americans are being forced to live with inflation that is higher than most of them can ever remember. Among the bigger ticket items seeing rapid price increases is housing. Prices for houses are rising at a record pace. Nicole Friedman reports in The Wall Street Journal:

Home-price growth surged to a record in 2021, as low mortgage-interest rates prompted buyers to compete fiercely for a limited number of homes for sale.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 18.8% in the 12 months that ended in December, unchanged from the prior month. The calendar-year increase was the highest since the index began in 1987.

The Covid-19 pandemic kicked off a nationwide housing boom. Households took advantage of record-low rates and sought more space to work from home. Home sales climbed to a 15-year high in 2021.

A shortage of homes for sale led to bidding wars, pushing price growth to new highs. The low inventory has persisted into this year, with the number of homes for sale sliding to a record low in January, according to the National Association of Realtors.

First-time buyers are struggling to compete against cash buyers and investors. The share of first-time buyers in the market fell to 27% in January, down from 33% a year earlier, according to NAR.

Home-price growth has decelerated in recent months and is expected to slow further in 2022 as mortgage rates continue to increase. The average rate on a 30-year fixed-rate mortgage was 3.92% as of Thursday, said mortgage finance giant Freddie Mac, the highest level since May 2019.

“The surge in mortgage rates is likely to take a bite out of the demand for housing, mostly among first-time buyers and those with limited budgets,” said Selma Hepp, deputy chief economist at CoreLogic.

The Case-Shiller 10-city index gained 17% over the year ended in December, compared with a 16.9% increase in November. The 20-city index rose 18.6%, after an annual gain of 18.3% in November. Price growth accelerated in 15 of the 20 cities.

Economists surveyed by The Wall Street Journal expected the 20-city index to gain 18.1%.

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