Home prices suddenly jump after several months of declines

Unexpectedly strong home sales at the start of this year reversed a sharp, several-month decline in home prices. Mortgage rates are behind the swing.

Home prices nationally rose 0.16% in February, when seasonally adjusted, according to Black Knight. That is the strongest one-month gain since May of last year. Home prices are now 2.6% below their peak last June.

Of the 50 largest U.S. markets, 39 saw home prices rise in February. That’s a quick turnaround from November, when prices were falling in 48 of 50 markets.

Behind the quick change are wide swings in mortgage rates. The average rate on the 30-year fixed began rising off of a record low at the start of 2022. By June it had gone from around 4% to just over 6%. Sales slowed down, and prices followed. By fall, the rate shot over 7%, and home prices began cooling more quickly.