Justin Sullivan/Getty Images
Home-price gains showed no signs of slowing in March, putting continued pressure on buyers as mortgage rates have also recently risen to their highest levels in years.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 6.5% in March, identical to the year-over-year increase reported in February.
The 10-city index gained 6.5% over the year, up slightly from 6.4% the prior month. The 20-city index gained 6.8%, unchanged from the previous month. Economists surveyed by The Wall Street Journal had expected home price growth to decelerate slightly in March, with the 20-city index gaining 6.7%.
The biggest price gains remained concentrated in the West. Seattle saw a 13% annual gain in prices, while Las Vegas prices increased 12.4% and San Francisco saw an 11.3% increase.
David Blitzer, managing director at S&P Dow Jones Indices, attributed the price gains to a lack of homes for sale. Housing inventory is near the lowest level in decades. “Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising,” he said.
Mr. Blitzer noted, however, that the current gains remain more moderate than the last housing bubble, when nationally home price gains peaked at 14.5%—bigger than the current gains in Seattle.
Home-price gains accelerated in 2017 compared with 2016. Nonetheless, economists expected the pace of price growth to slow this year, due to a new tax law that passed in late February that reduced the incentive for homeownership, as well as rising mortgage rates that make owning a home less affordable.
The rate for a 30-year mortgage rose to 4.66% last week from 3.99% at the end of last year, according to mortgage company Freddie Mac. Mortgage rates rose in 15 of the 21 weeks of the year so far-the highest share since Freddie began tracking the data in 1972.
Affordability challenges and the shortage of inventory are dampening home sales. Existing-home sales fell 2.5% in April from the prior month to a seasonally adjusted annual rate of 5.46 million, the National Association of Realtors said last Thursday. Compared with a year earlier, sales in April were down 1.4%—the second consecutive month sales declined on an annual basis.
Month-over-month, the U.S. home-price index rose 0.8% in March before seasonal adjustment, while the 10-city and the 20-city index rose 0.9% and 1% respectively from February to March.
After seasonal adjustment, the national index rose 0.4% month-over-month. The 10-city index rose 0.4% and the 20-city index rose 0.5%. All 20 cities saw price increases in March before seasonal adjustment and 19 out of 20 saw them rise with seasonal adjustment.
The post Home Prices Continued to Rise in March appeared first on Real Estate News & Insights | realtor.com®.