In February, home prices surged to a new peak despite soaring mortgage rates, exacerbating affordability challenges for many Americans amid a persistent housing shortage.

According to the S&P CoreLogic Case-Shiller index, national home prices rose by 6.4% compared to the previous year, accelerating from the prior month’s 6% increase and marking the fastest growth since November 2022.

On a monthly basis, prices climbed by 0.4%.

Various factors are contributing to the affordability crisis, including years of underbuilding, rising mortgage rates, and expensive construction materials.

Additionally, sellers who secured historically low mortgage rates during the pandemic are hesitant to sell, further constraining supply.

Economists anticipate that mortgage rates will remain high throughout 2024, with a potential decline only occurring once the Federal Reserve begins to cut rates, Fox Business reported.

However, even with potential rate cuts, rates are not expected to return to pre-pandemic lows.

Moreover, investors are cautious about the possibility of a Fed rate hike in response to higher-than-expected inflation reports earlier in the year.

Written by B.C. Begley