Ruben Kaguinarp | | Bankrate.com
Will home prices finally return to their previous levels?
In July 2022, year-over-year house price growth slowed at a record pace. S&P CoreLogic’s latest Case-Shiller US National Home Price NSA Index, released Sept. 27, reports that price growth fell 2.3% from June to July — from 18.1% to 15.8. %What.
Prices are still up compared to a year ago, but it’s the biggest one-month drop in the index’s history. Prices fell in the city.
“U.S. home prices are still well above last year’s levels, but our July report reflects a significant slowdown,” said Craig J. Lazzara, managing director of S&P DJI, in a statement. says. “Mortgage financing has become more expensive as the Federal Reserve continues to raise interest rates, a process that continues to this day. We may continue to slow down.”
The Fed and the housing market
The Federal Reserve’s aggressive move to combat inflation is putting upward pressure on mortgage rates. In September, the Fed announced his third consecutive rate hike of 3/4 percentage point. While the Federal Reserve doesn’t set mortgage rates directly, the mortgage market’s interpretation of central bank moves will affect how much you pay for your mortgage.
The long period of low mortgage rates that followed the Great Recession ended earlier this year. This year he passed 6% in June for the first time since 2008. The upward trend continued in September, when interest rates reached 6.73%.
Steve Reich, Chief Operating Officer of Finance of America Mortgage, highlights the impact these trends will have on the housing market. “Housing price growth continues to slow as the Fed works to curb inflation,” he said. “The gradual slowdown could be attributed to higher interest rates, which eased the amount many homebuyers were able to afford, and softened home sales.”
In this context, Federal Reserve Chairman Jerome Powell has stressed the need to “reset” the housing market to better match housing supply and demand. Powell called the slowdown in house prices a “good thing,” but homeowners may see it differently.
Mark Hamrick, senior economic analyst at Bankrate, said: “The sharp rise in mortgage rates has acted like a kind of gold handcuffs, with people’s desire to move out of the house they currently own. It’s limiting some of the capacity: “It puts more pressure on housing inventories and makes supply losses even worse.”
What it means for home buyers and sellers
Both buyers and sellers need to get on with the current market trends. “For prospective sellers, the new status quo calls for remaining flexible on pricing given the extraordinary challenges posed by the steep rise in mortgage rates,” says Hamrick. Those highly motivated to buy should be prepared for the shocks associated with increased purchase capital. , including reducing the lot size and housing quality as much as possible.”
Reich stresses that it is still possible to buy a home in today’s market. he says. “And that’s good news for homebuyers who are still in the game.”
https://www.ocregister.com/2022/10/07/home-prices-decelerating-by-record-amount-new-report-says/ Home prices slow to record amount, according to new report – Orange County Register