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lite.cnn.com - on gopher - inofficial | |
ARTICLE VIEW: | |
US home prices rose in February at the fastest pace in more than a year | |
By Bryan Mena, CNN | |
Updated: | |
11:12 AM EDT, Tue April 30, 2024 | |
Source: CNN | |
US home-price growth accelerated in February at the fastest annual pace | |
since November 2022, a sign that America’s housing market remains | |
tough | |
The S&P CoreLogic Case-Shiller US National Home Price Index, a measure | |
of home prices across the country, rose 6.4% in February from a year | |
earlier, a bigger increase than the 6% registered in January. On a | |
monthly basis, the index advanced a seasonally adjusted 0.4% in | |
February. | |
The Case-Shiller 20-city index also jumped in February, to an annual | |
gain of 7.3%, up from January’s 6.6% rise. Of the 20 cities, San | |
Diego saw the biggest increase in home prices in February, a steep | |
11.4% rise, followed by Chicago and Detroit. Meanwhile, home prices in | |
Portland, Oregon, are “still holding the lowest rank after reporting | |
two consecutive months of the smallest year-over-year growth,” | |
according to a release. | |
“US home prices continued their drive higher,” Brian Luke, head of | |
commodities, real and digital assets, at S&P Dow Jones Indices, said in | |
a release. “On a monthly basis, home prices continue to struggle in | |
the face of elevated borrowing costs. Seventeen markets dropped over | |
the last month, while Minneapolis has posted a 2.4% decline over the | |
prior three months.” | |
He added that “only Southern California and Washington, DC, have | |
stood up the rising wave of interest rates and deliver positive returns | |
to start the year.” | |
‘Buyers have been priced out of the market’ | |
America’s housing market began to recover in the beginning the year | |
as home sales surged from decades-lows in the fall and homebuilders | |
began to feel to more upbeat about the economy. There were also high | |
hopes that the Federal Reserve would cut interest rates several times | |
starting in the spring. That momentum seems to have fizzled out. | |
Existing home sales, which make up the vast majority of the housing | |
market, as home prices continued to rise that month, according to data | |
from the National Association of Realtors. Residential construction of | |
single-family homes also dropped sharply in March, according to | |
government figures, declining 12.4% to a seasonally adjusted annual | |
rate of 1.022 million units. | |
Inflation also proved to be much more stubborn than Wall Street and the | |
Fed previously expected, which was since it means the Fed won’t be in | |
a rush to cut interest rates. | |
The benchmark 10-year US Treasury yield closed above 4.7% last week, | |
the highest level since November. Mortgage rates have followed suit, | |
since they track the 10-year yield. The 30-year fixed-rate mortgage | |
averaged 7.17% last week, a peak for the year and the highest level | |
since November, according to Freddie Mac data. Economists don’t | |
expect mortgage rates to drop meaningfully this year, and they could | |
continue to climb if inflation remains stuck. | |
Mortgage rates play an important role in determining affordability, in | |
addition to home prices and family incomes. That’s proving to be a | |
key sticking point for potential homebuyers. | |
A separate gauge of home prices by Moody’s Analytics released Monday | |
showed there was a slowdown in prices last month. The Moody’s | |
Analytics House Price Index rose 0.12% in March, which was “the | |
slowest pace of monthly gains in more than a year,” according to a | |
release. | |
Still, despite the shred of good news provided by that measure, the US | |
housing market remains woefully difficult for buyers because of high | |
mortgage rates, Matthew Walsh, a Moody’s Analytics housing economist, | |
said in a release. | |
“Many potential buyers have been priced out of the market,” Walsh | |
said. | |
Some good news on housing | |
One unmistakble improvement in the housing market has been the increase | |
in housing investory over the past few months, according to NAR data. | |
Inventory of unsold homes rose 4.7% in March from the prior month to | |
1.11 million units, and was up 14.4% from a year earlier, NAR reported | |
earlier this month. More homes came to market in February, too. | |
It’s a step in the right direction, but supply still isn’t keeping | |
up with demand. The persistent undersupply of housing can be attributed | |
to various reasons, but a big one has been that some homeowners are | |
choosing not to sell because they want to hold on to their low mortgage | |
rate. That is still limiting affordability. | |
“Home sales are stuck because interest rates have not made any major | |
moves,” NAR chief economist Lawrence Yun said earlier this month. | |
“We need more inventory, definitely.” | |
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