U.S. home prices unexpectedly climbed month over month in February, two separate housing indexes found, as buyers came back into the market when mortgage rates softened.
The S&P CoreLogic Case-Shiller U.S. National Home Price index rose 0.2% in February compared with the previous month, according to data released on Tuesday. That ended seven consecutive months of price declines.
Another measure released Tuesday showed home prices rose 0.5% from the previous month in February, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly house price index.
"This increase was, in part, due to a decline in mortgage rates by more than half a percentage point from the peak reached in early November as well as historically low housing inventory," Dr. Nataliya Polkovnichenko, supervisory economist at FHFA’s division of research and statistics, wrote in the press release.
On a yearly basis, home price growth continued to decelerate, according to the S&P CoreLogic Case-Shiller index. Housing values were up 2.0% in February — lower than the 3.7% annual gain recorded in January. The index also remains 4.9% below its June 2022 peak.
The report’s 20-City Composite index, which tracks prices in the 20 largest metros, showed prices in February rose 0.1% on a seasonally adjusted basis over the prior month and rose 0.4% over last year. That bested economists' expectations of a 0.35% decline for the month and a 0.10% decrease versus year, according to data compiled by Bloomberg.
“The moderation we observed nationally is also apparent at a more granular level," Craig J. Lazzara, Managing Director at S&P DJI, said in the press release. "With or without seasonal adjustment, most cities’ February results showed improvement relative to their January counterparts."
Regionally, the cities that saw the largest price increase over last year were in Miami, Tampa, and Atlanta, with year-over-year gains of 10.8%, 7.7%, 6.6%, respectively.
The Southeast remains the country’s strongest region, with price gains of 7.8% in February, according to the S&P CoreLogic Case-Shiller index.
This differs from the western markets such as Las Vegas, Phoenix, Los Angeles and Denver, which all tipped into negative territory, all which saw home prices fall against the previous year, with drops of 2.6%, 2.1%, 1.3%, and 1.2%, respectively.
"Even in markets with the largest price drops since last year’s peaks, such as San Francisco, home prices picked up pace in February," said CoreLogic Chief Economist Selma Hepp about the index. "Still, the housing markets continue to vary across markets and price tiers, but lower mortgage rates and low inventories have been helpful in providing the floor for prices in where prices seemed to have nosedived following mortgage rate surge."
The national price growth jibes with earlier data showing a boost in home purchase activity.
Data Tuesday from the Census Bureau showed that new home sales grew in March following the commercial banking turmoil. New single-family home sales climbed 9.6% to a seasonally adjusted rate of 683,000 units, above the 1.3% drop expected by economists compiled by Bloomberg.
Existing home sales in February also jumped 14.5% to an annualized rate of 4.58 million, the National Association of Realtors reported in March. That ended a 12-month slide in purchases and marked the biggest monthly percentage increase since July 2020.
Still, mortgage rates remain a big question mark for the housing market. After falling for five straight weeks, the rate on the 30-year fixed mortgage ticked up last week to 6.39% from 6.27% the week prior, according to Freddie Mac.
“Although forecasts are mixed, so far the Federal Reserve seems focused on its inflation-reduction targets, which suggests that interest rates may remain elevated, at least in the near term," he said. "Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
Read the latest financial and business news from Yahoo Finance