Seattle’s housing market started the new year with a milestone: Housing prices here have been growing at the second-fastest rate in the nation for a full year.

For the 12th month in a row, only Phoenix outpaced the Seattle area for year-over-year home price growth in January, according to the S&P CoreLogic Case-Shiller Home Price Index released Tuesday. The index measures price growth in 20 metro areas, reports a three-month rolling average of home prices and lags by two months. The data reflects prices across the Seattle metro area, including parts of King, Pierce and Snohomish counties.

Seattle-area home prices were up 14.3% in January, compared to a year earlier. That was slightly slower than growth in Phoenix, where prices jumped 15.8%, and just barely faster than San Diego, where prices were up 14.2%.

Across the country, prices are climbing faster than they have in more than a decade. The nationwide 11.2% year-over-year increase in January was the highest recorded since nearly 15 years ago, in February 2006, according to Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.

A “collision between robust demand and rock-bottom inventory” is driving prices up, Zillow senior economist Jeff Tucker said in a statement.

Seattle prices zoomed up faster at the start of this year than at the peak of 2018’s brutal spring housing market, when prices were up 13.5% in May 2018 compared with the previous year, according to the index. 

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The index continues to show that prices are rising most steeply on the most affordable homes in the Puget Sound region. The cost for homes under $496,165, the least expensive one-third of homes sold, was up roughly 17% year-over-year in January compared to about 13% for the top third, homes over $741,250. 


Across King, Pierce and Snohomish counties, Pierce County continues to see the most dramatic price hikes, according to separate January data provided by Zillow. Prices were up 19.2% in Parkland compared to last year, 17.5% in Tacoma and 16.9% in Spanaway. 

Pricier areas like Seattle and Mercer Island saw slower growth. The cost of homes was up 8.7% in Seattle and 7.2% in Mercer Island, according to Zillow. Other outlying towns, like Bothell, Kent and Lynnwood, were in the middle of the pack, with prices up about 13%.

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Across the country, the increasingly unaffordable market “will discourage some potential home buyers from entering the market,” said CoreLogic Deputy Chief Economist Selma Hepp in a statement. 

But that could also “take some wind out of its sails, slowing the home price growth rate by about a half by the end of 2021,” Hepp predicted. “The biggest concern remains the lack of for-sale homes. Potential sellers may be discouraged by their inability to find a new home and subsequently choose to not list their own home – leading to a vicious cycle of declining for-sale homes.”