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Annual growth in US home prices slowed in February as buyers were squeezed by higher borrowing costs.
According to S&P CoreLogic Case-Shiller data, home prices rose 2 percent nationally in February, a slower pace than January’s 3.7 percent gain.
Many potential buyers were driven away as borrowing costs suddenly and rapidly rose, causing markets across the country to cool.
While demand is starting to pick up in some areas, the shortage of listed homes is putting pressure on sales.
Before the banking crisis in March, Craig Lazzara, managing director of S&P Dow Jones Indices, pointed out that the data is reflective of that time period.
In a statement on Tuesday, Lazzara noted that while predictions may differ, the Federal Reserve seems to be concentrating on curbing inflation.
As a result, interest rates are expected to remain high, particularly in the short run.
Lazzara also suggested that mortgage financing and the bleak economic forecast could exert downward pressure on home prices over the next few months.
Monthly prices rose after 7 months of decline. On a seasonally adjusted basis, the national index rose 0.2% in February from the previous month sales season.
February usually marks the beginning of the busiest selling season in the real estate market. Demand has increased as mortgage rates have fallen since the start of the year.
The stock remained tight as borrowing costs continued to rise sharply between 2021 and early 2022, preventing homeowners with cheaper mortgages from going public.
According to data from Freddie Mac, the average 30-year mortgage rate was 6.39 percent last week, down slightly from 6.48 percent earlier this year.
Nicole Bachaud, chief economist at Zillow, noted that while year-over-year price growth is still decreasing, the transition from negative monthly growth to positive monthly growth is indicative of a return to the typical patterns seen during the spring home buying season.
Daniel Hale, chief economist at Realtor.com, noted that as buyers and sellers adapt to higher mortgage rates and lower affordability, regional trends in real estate are diverging.
According to Lazzara, there were substantial differences in geography. Miami experienced a significant increase in prices with a year-over-year rise of 10.8%, along with Tampa, Florida, and Atlanta.
However, some West Coast cities such as Los Angeles saw a decline in prices, falling by 1.3%.
It appears that while real estate has always been local, the current market conditions have intensified the differences between regions.
Reference Source: OC Register
