San Diego real estate
A home for sale in the Tierrasanta neighborhood of San Diego. Staff photo.

Home prices in San Diego increased 3.7% in March, down slightly from February’s nation-leading 4.5%, according to the authoritative Case-Shiller Index released Tuesday.

For the past 12 months, home prices in the San Diego metro area were up 29.6%, the 5th highest behind Tampa at 34.8%, Phoenix at 32.4%, Miami at 32.0% and Dallas at 30.7%.

Although the trend in home prices dipped slightly in San Diego, that was not the case nationwide. The average increase in March was 2.6%, up from 1.9% in February, and 20.6% for the past 12 months.

“Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer,” said Craig J. Lazzara, managing director at S&P Dow Jones Indices.

He said rising interest rates would likely begin to slow the surge in prices nationwide, but it is hard to predict when.

“Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer,” Lazzara said.

“Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call,” he said.

The online real estate service Zillow echoed Lazarra in suggesting the meteoric rise in home prices is nearing an end.

“The market may be nearing an inflection point when it comes to price growth. Mortgage costs are more than 50% higher than they were a year ago and prospective buyers will likely start to rethink what they can afford,” said Zillow data analyst Dan Handy.

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

Chris Jennewein

Chris Jennewein is Editor & Publisher of Times of San Diego.