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Home prices ran hot in April – but has the market changed since?

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By Alicia Wallace, CNN Business

US home prices ran hot again in April, notching another month of more than 20% year-over-year gains, according to the latest S&P CoreLogic Case Shiller US National Home Price Index data, released Tuesday.

Home prices rose 20.4% in April from the year before, compared to a 20.6% rise seen in March and a 20% annual increase posted in February, according to the report.

The latest data represents a snapshot of a housing market in transition, even before the Federal Reserve tightened the bolts on monetary policy — including its largest interest rate hike in almost three decades — throwing cool water on the housing market in the process.

“Back in April, things were still quite strong,” said Laila Assanie, senior business economist for the Federal Reserve Bank of Dallas. “Home sales were robust, prices were rising quite rapidly, demand was strong, and many of the builders were seeing their homes sell for more than the asking price.”

A lot has changed since then.

Mortgage rates fell last week, but decline provides little relief to Triangle homebuyers

Changing market

There have been two more interest rate hikes from the Fed as it attempts to curb high inflation and get supply and demand more in sync. Mortgage rates, which respond to market dynamics and tend to track the movements in 10-year US Treasury bonds, have also ratcheted up even further, with the average 30-year fixed rate mortgage hitting 5.81% last week.

Those rising mortgage rates have already had a huge impact. “The [housing] market has cooled down, and it’s normalizing,” Assanie said.

Sellers are having to work a little harder to close the deal, and investors — who had been buying properties in bulk — appear to be pulling out of the market, she said.

“We don’t expect a large decline in home prices across the US; it’s likely to remain fairly stable,” said Leo Feler, senior economist at the UCLA Anderson School of Management.

Wake County real estate market sees a price pause – agents still predict prices will rise

There are certain markets — “boom and bust” areas like Las Vegas, Phoenix, and Jacksonville and Tampa in Florida — where prices may see deeper declines, he said.

“What seems to have driven some of these home price increases is these are places that have had a big influx of population during these past two years,” he said.

Study: Triangle 2nd in US for growth from relocation – that could drive up home prices

Separate data released Monday by the National Association of Realtors showed that pending home sales also surged in May. The pending home sales index, which measures signed contracts on existing homes for sale, saw an uptick of 0.7% in May from April. However, sales were down 13.6% since last year.

The housing market “is clearly undergoing a transition,” said Lawrence Yun, the National Association of Realtors’ chief economist.

“Contract signings are down sizably from a year ago because of much higher mortgage rates,” he said in a statement.

Wake County real estate prices up in May even as lending activity, competition decrease

Hot housing: Investors and ‘flippers’ buying record number of Triangle homes

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  • Source: https://wraltechwire.com/2022/06/28/home-prices-ran-hot-in-april-but-has-the-market-changed-since/

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