Higher Mortgage Rates Drive Home Prices Down

Index nevertheless shows a monthly increase
By Bob Cronin,  Newser Staff
Posted Jun 28, 2023 4:55 PM CDT
For the First Time in 11 Years, Home Prices Show Annual Drop
A for sale sign stands outside a home Colorado Springs, Colorado, last week.   (AP Photo/David Zalubowski)

For the first time in 11 years, home prices have shown a year-over-year price decline nationally. The S&P CoreLogic Case-Shiller National Home Price Index recorded a 0.2% drop in April, the Wall Street Journal reports. April 2012 was the last time prices had fallen from a year before. Mortgage rates have something to do with it: Interest rates climbed last year, prompting sales to slow. When it comes to monthly figures, however, the index put the seasonally adjusted change for April at a 0.5% increase, the third straight month prices have risen. The Federal Reserve Bank of Atlanta reported that affordability for buyers in April was at its lowest point since November.

The Federal Housing Finance Agency also showed a seasonally adjusted monthly price increase for April, at 0.7%. Low inventory is another factor affecting prices, per Yahoo Finance. Some economists expects more of a price drop, but the higher mortgage rates could be keeping houses off the market by making homeowners reluctant to sell. Freddie Mac has the average rate for a 30-year, fixed-rate mortgage at 6.67% in the week ended June 22, up from 5.81% a year before. "On a month-over-month basis, house prices have been re-accelerating for the past three months,"said Mark Fleming, First American's chief economist. "This is good news for homeowners gaining more equity, but it will pressure affordability for the potential first-time homebuyer." (More home prices stories.)

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