‘It will take time for rising mortgage rates to rebalance the market’: Home prices continue to soar, but buyers may see relief soon

The payment: That S&P CoreLogic Case-Shiller price index for 20 cities was up 20.2% yoy in February, up sharply from 18.9% the previous month. On a monthly basis, the index rose 2.4% between January and February.

Meanwhile, the Case-Shiller national home price index rose 19.8% between February 2021 and February 2022. This was the third-biggest rise in house prices in the history of the Case-Shiller report.

A separate report Federal Housing Finance Agency growth was in line with home price growth recorded by the Case-Shiller indices. The FHFA home price index showed prices up 19.4% yoy in February and 2.1% mom.

“Home prices rose to a new all-time high in February,” Will Doerner, regulatory economist in FHFA’s Division of Research and Statistics, said in the report. “The acceleration is almost double what it was a year ago. Property prices continue to rise, partly due to supply constraints.”

Key data: As in previous months, Phoenix posted the nation’s highest rate of home price growth in February, up 32.9% year over year, according to the Case-Shiller report. Two Florida cities followed close behind: Tampa, up 32.6% and Miami, up 29.7%.

All 20 cities that the Case-Shiller report tracks not only saw double-digit price growth in February, but a faster pace of growth than the previous month.

The big picture: The delayed nature of these two home price reports belies the current state of the housing market. Data on home sales and mortgage applications suggest that consumer demand is being hurt by the rapid rise in mortgage rates. Given that the intensity of competition in the housing market is largely responsible for the historical pace of house price growth, economists expect the situation to change soon.

“The macroeconomic environment is evolving rapidly and may not support exceptional home price growth much longer,” Craig J. Lazzara, S&P DJI’s managing director, said in the Case-Shiller report, citing the Federal Reserve’s response to high inflation . He cautioned that the impact of rising mortgage rates may not yet be reflected in home price data, but could be coming soon.

Looking ahead: “It will take time for rising mortgage rates to rebalance the market and extinguish the price flames,” said Sal Guatieri, senior economist at BMO Capital Markets, in a research note.

“With purchasing power falling and mortgage rates rising above 5% in recent weeks, home price growth is likely to slow down in the coming months,” said Selma Hepp, deputy chief economist at CoreLogic.

“We expect price increases to slow significantly later this year as sales volumes fall,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a research note.

https://www.marketwatch.com/story/it-will-take-time-for-surging-mortgage-rates-to-rebalance-the-market-home-prices-are-still-skyrocketing-but-buyers-could-see-relief-soon-11650979422?rss=1&siteid=rss ‘It will take time for rising mortgage rates to rebalance the market’: Home prices continue to soar, but buyers may see relief soon

Brian Lowry

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