Homebuyers waiting for home prices to budge may have to wait longer. (iStock)
Home prices continued to increase in March, reaching a new high despite homebuyers shying away from housing, according to the latest S&P CoreLogic Case-Shiller national home price index report.
Home prices are now 6.5% above their level last year, on par with the increase registered in February. The 10-city composite increased 8.2% annually from 8.1% the previous month. At the same time, the 20-city composite posted a rise of 7.4%, up from 7.3% the previous month. The indices measure home prices in major metros across the country.
Across the nation, home prices increased 0.3% month-over-month, slowing down from the 0.6% growth in the previous month. The 10-city composite registered 0.5% growth, while the 20-city composite increased by 0.3% after seasonal adjustment. This annual and monthly growth in home prices comes as home buyers struggle with affordability issues caused by high mortgage rates and a lack of housing supply.
“The disconnect between slow home sales activity and rising prices suggests that the affordability crunch has pushed many potential homebuyers out of the market, and those who are able to participate have stronger credit and larger budgets,” CoreLogic Chief Economist Selma Hepp said. “As a result, we continue to see home prices push higher in most markets despite elevated mortgage rates and the rising cost of homeownership in general.”
Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
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Prices for homes in these cities gained the most
San Diego kept its top spot, reporting the highest year-over-year gain among the 20 cities this month, with an 11.1% increase in March. New York and Cleveland followed in second place, registering an annual growth of 9.2% and 8.8%, respectively.
Despite the record growth, there are signs of a slowdown. Top-tier cities during the pandemic market of 2020 and 2021, like Tampa, Phoenix, and Dallas, are all growing at a much slower pace, as relatively abundant new and existing inventory is helping relieve price pressure in the region.
“Regionally, the Northeast remains the top performer with an 8.3% annual gain, showcasing robust growth compared to other metro markets,” S&P Dow Jones Indices Head of Commodities, Real & Digital Assets Brian Luke said. “COVID was a boom for Sunbelt markets, but the bigger gains the last couple of years have been the northern metro cities.”
One way to use your home’s equity is through a cash-out refinance to help you pay down debt or fund home improvement projects. Visit Credible to find your personalized interest rate without affecting your credit score.
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Housing supply is improving
Housing inventory jumped 23.5% in March, but existing home sales dipped 4.3% in March following February’s large gain, according to Realtor.com Senior Economist Ralph McLaughlin. The high mortgage rates between the end of March and the beginning of May are likely to dampen home price growth and home sales in future housing market data releases, even as inventory continues to improve.
Inventory is up but is still roughly 40% lower than pre-pandemic levels. The good news for homebuyers is that affordable home inventory (homes priced between $200,000 and $350,000) increased 41% in April, McLaughlin said.
“While this is certainly welcome news to inventory-constrained homebuyers, recent mortgage rate increases along with inventory sitting at well below pre-pandemic levels is bringing yet another challenging season for those looking to buy,” McLaughlin said.
If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
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