Home price increases accelerated again in January after cooling slightly towards the end of last fiscal year.

According to the S%P CoreLogic Case-Shiller Index, national home prices rose by 19.2% in January compared with 18.9% December. In January, the 10-city Composite Annual increase was 17.5% compared with 17.1% in December. Composites for 20 cities rose 19.1%, compared to 18.6% in December.

With 32.6%, 31.8% and 28.1% respectively, the largest annual gains were seen in Phoenix and Tampa. 16 of 20 cities saw higher prices in January 2022 than the December 2021 year.

The smallest annual gains were seen in Washington, D.C., Minneapolis, and Chicago, but they all saw double-digit increases from last year.

Rising mortgage rates are causing some heat in housing markets, as they seem to outweigh tight supply and high demand.

Although the index has a running average of three months, it began rising in January. Mortgage News Daily reports that the average fixed 30-year rate was around 3.25% in 2021 and was 3.68% in January. The rate is flirting at 5%.

The macroeconomic climate is changing rapidly. A decline in COVID cases along with a rebound of economic activity have stoked inflation. As a result, the Federal Reserve started to increase its interest rate. We may soon begin to see the impact of increasing mortgage rates on home prices,” said Craig Lazzara, managing director at S&P Dow Jones Indices.

In the first month of 2018, sales have seen an increase in mortgage rates. The National Association of Realtors reports that pending home sales (which measure the number of signed contracts on existing properties) have dropped for four straight month.

According to a press release, George Ratiu (senior economist, Realtor.com), “the monthly payment of a median-priced house has increased 30% over the last year,” said Ratiu. Although the number of available homes for sale will continue to put upward pressure on the prices, conditions are expected to change in the coming months.