San Diego’s home prices accelerated at a level not seen in 18 years in March, as rising interest rates have not slowed the market.

Home prices in the San Diego metro area rose 29.6 percent year-over-year in March, according to the S&P Case-Shiller Indices. That was up from 29.1 percent in February.

Prices haven’t increased at this pace in 18 years. The biggest annual rise was 33.37 percent increase in July 2004.

San Diego metro — which includes all of San Diego County — had the fifth-highest annual increase in the 20-city index as the nation breaks records in the surging home market. Nationwide home prices were up 20.6 percent, its highest in 35 years of data.

Economic data analyst Dan Handy wrote that March’s numbers may be near a peak for the surging market with price reductions happening nationwide — even in San Diego — as mortgage rates continue to rise.

“Price growth will likely begin to come back towards earth,” he wrote, “as many buyers are priced out and inventory rises.”

Many housing analysts predicted home price gains would decelerate with rising mortgage rates. This has been a common prediction for months now and it just hasn’t happened. Demand is likely to get a jolt soon as the busy spring and summer homebuying season starts.

The interest rate for a 30-year, fixed-rate mortgage was 4.17 percent in March, reported Freddie Mac, up from 3.08 percent the year before. The rate is way up from December 2020’s average of 2.68 percent, which was the lowest in records going back to 1971.

Selma Hepp, deputy chief economist at CoreLogic, wrote that buyers were concerned rates will continue to rise in the first quarter, motivating them to try even harder.

“Homebuyer frenzy reached another new high as eager buyers pursued last-ditch efforts to secure a home purchase before the mortgage rate surge,” she wrote.

Tampa had the fastest annual home price increase at 34.8 percent in March. It was followed by Phoenix at 32.4 percent and Miami at 32 percent.

San Diego’s increases have outpaced other California markets every month since July 2019. In March, prices were up 24.1 percent in San Francisco and 23.2 percent in Los Angeles.

The Case-Shiller Indices are different than just looking at the median home price. It takes into consideration repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The median price for a resale single-family house in San Diego County in March was $925,000.

The index is typically about two months behind, and uses a three-month rolling average. Looking ahead: It appears there may be some deceleration in the market. In the last four weeks, 5.9 percent of San Diego County homes have had a price reduction. That’s the highest in at least four years and outpaces the nationwide average of price reductions — 4.8 percent — in the same time period.

Another sign that things might be cooling was U.S. Census Bureau data showing sales of new single-family homes had slowed by 17 percent in April — down to its lowest rate in two years.

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S&P Case-Shiller Indices

Annual price growth by metro area

Tampa: 34.8 percent
Phoenix: 32.4 percent
Miami: 32.0 percent
Dallas: 30.7 percent
San Diego: 29.6 percent
Las Vegas: 28.5 percent
Seattle: 27.7 percent
Charlotte: 26.0 percent
Atlanta: 25.7 percent
San Francisco: 24.1 percent
Denver: 23.7 percent
Los Angeles: 23.2 percent
Portland: 19.3 percent
Detroit: 15.4 percent
Cleveland: 14.7 percent
Boston: 14.5 percent
New York: 13.7 percent
Chicago: 13.0 percent
Washington: 12.9 percent
Minneapolis: 12.4 percent
Nationwide: 20.6 percent

Source: SDuniontribune by Phillip Molnar