San Diego had the fastest rising home prices in the nation for a third month.

The San Diego metropolitan area’s annual home price increased 11.4 percent annually in February, according to an S&P Case-Shiller Indices report. It was followed by Chicago and Detroit, both up by 8.9 percent.

All metro areas in the 20-city index experienced price gains, despite higher mortgage rates and steady home price growth for years. On average, nationwide home prices were up 6.4 percent annually, which was the fastest pace since November 2022.

“Home prices continue to defy expectations in the face of high mortgage rates and worsening affordability,” wrote Bright MLS chief economist Lisa Sturtevant.

She wrote that rising mortgage rates and increasing inventory in some areas of the country will likely slow the pace of growth in coming Case-Shiller reports. The index is delayed and uses a three-month rolling average, not reflecting recent mortgage rates.

In the last week of February, the average interest rate for a 30-year, fixed-rate mortgage was 6.94 percent, according to Freddie Mac. It had risen to 7.43 percent by Tuesday morning, according to Mortgage News Daily.

Alan Gin, economist at the University of San Diego, said Monday that conventional wisdom that higher interest rates would lower prices didn’t seem to be working out locally.

He said higher mortgage rates discourage homeowners from selling — likely because they have lower rates locked in. Gin said that in a roundabout way, interest rates were limiting the number of homes for sale, creating increased competition and, in turn, causing prices to go up.

An analysis by Skylar Olsen, chief economist of Zillow, said the “rate lock” phenomenon seemed to be waning with increased home listings. However, it was mainly in states with substantial residential construction — Texas and Florida — not Southern California or parts of the Rust Belt.

“San Diego has been the best performing market following the trough in home prices observed in early 2023,” wrote Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices. “With Los Angeles rising for 13 consecutive months to record another new high, Southern California has outperformed its surrounding neighbors. San Francisco has dropped 12 percent since its peak, while Phoenix and Las Vegas have dropped 6 percent and 4.5 percent, respectively.”

Metros lagging behind much of the nation in annual returns include Portland, up 2.2 percent, and Denver, up 2.7 percent.

The Case-Shiller Indices track repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The median resale single-family home price in the San Diego metro, which includes all of San Diego County, was $940,000 in February.

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Annual price growth by metropolitan area

S&P/Case-Shiller Home Price Index, February 2024

San Diego: 11.4 percent
Chicago: 8.9 percent
Detroit: 8.9 percent
Los Angeles: 8.7 percent
New York: 8.7 percent
Charlotte: 8.2 percent
Boston: 8 percent
Miami: 8 percent
Las Vegas: 7.3 percent
Seattle: 7.1 percent
Washington, D.C.: 7.1 percent
Cleveland: 7 percent
Atlanta: 6.4 percent
San Francisco: 5.2 percent
Phoenix: 4.9 percent
Tampa: 4.3 percent
Minneapolis: 3.9 percent
Dallas: 3.5 percent
Denver: 2.7 percent
Portland: 2.2 percent

Source: SDuniontribune by Phillip Molnar