<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1656426528765,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1656426528765,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_56426373", "obj": {"id":"27789","width":"16","height":"9","video":"1038247"} }); ","_id":"00000181-aab6-d578-a1dd-aabef6cb0002","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedHome price increases slightly decelerated in April, although prices are still extremely high compared to just a year ago.
Prices rose 20.4% on the year in April, slightly slower growth from the month before, when prices were up 20.6%, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. The deceleration comes as the Federal Reserve hikes its interest rate target in an attempt to slow demand in response to towering inflation.
It was the first time the index showed a slowdown in the pace of price increases since November. Less than half of the 20 cities used to calculate the index saw prices rising at a faster rate than the month before as it becomes more likely that the housing boom, brought on in part by ultralow mortgage rates, might have peaked.
“April 2022 showed initial (although inconsistent) signs of a deceleration in the growth rate of U.S. home prices,” said Craig Lazzara, managing director at S&P DJI. “We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April.”
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Also on Tuesday, the Federal Housing Finance Agency’s House Price Index showed housing prices continued to increase on a monthly basis by 1.6% in April, the same pace as March’s upwardly revised number. On an annual basis, home prices were up 18.8% in April.
Home prices soared over the past year or so after the Fed slashed interest rates to zero and mortgage rates ticked downward. The country’s red-hot housing market struggled to meet explosive demand, thus home prices lurched ever upward.
Now, as the central bank jacks up rates, mortgage rates have also begun to rise, making it more expensive for potential homebuyers.
As of Tuesday, the average 30-year fixed-rate mortgage was 5.81%, up about 2.8 percentage points from a year before. This month, the Fed announced it would increase its target interest rate (which is a different, very short-term rate) by two-thirds of a percentage point, its most aggressive increase since 1994.
Sales of existing homes tumbled last month for the fourth month in a row as housing became less affordable across the country.
Existing home sales declined by 3.4% in May to a seasonally adjusted annual rate of 5.41 million, according to a report by the National Association of Realtors released Tuesday. Sales were down 8.6% from a year ago.
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“Home sales have essentially returned to the levels seen in 2019, prior to the pandemic, after two years of gangbuster performance,” said NAR Chief Economist Lawrence Yun.
“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” he added.
