Home Prices Defy Mortgage Rate Surge, Climbing 3.9% in September
Despite a sharp increase in mortgage rates, home prices continued to rise across the United States in September, according to the S&P Case-Shiller National Home Price Index. The index tracks home prices in 20 major metropolitan areas, rose 3.9% year-over-year in September, down from 4.2% in August but still well above pre-pandemic levels.
The ongoing rise in home prices is attributed to several factors, including strong demand from buyers, low inventory, and continued economic growth. The median home price in the United States is now $436,000, up from $386,600 a year ago.
The surge in mortgage rates, which have risen by more than two percentage points since the beginning of the year, has dampened some demand for homes. However, the impact of higher rates has been limited by the strong fundamentals of the housing market.
“Despite the rise in mortgage rates, the housing market remains strong,” said Craig J. Lazzara, Managing Director at S&P DJI. “Low inventory and strong demand continue to drive home prices higher.”
The increase in home prices is putting a strain on affordability for many buyers. The median home price is now more than five times the median household income in the United States.
“The rise in home prices is making it increasingly difficult for many people to afford a home,” said Lawrence Yun, chief economist at the National Association of Realtors. “This is a major challenge for the housing market going forward.”
The continued rise in home prices despite higher mortgage rates is a sign of the housing market’s resilience. However, the affordability challenge is becoming increasingly acute, and this could eventually lead to a slowdown in home price growth.
The Federal Reserve is expected to continue raising interest rates to combat inflation. This is likely to put further upward pressure on mortgage rates, which could further dampen demand for homes.
The housing market will likely remain strong in the near term, but affordability is a major concern. The Fed’s actions on interest rates will be critical in determining the future direction of the housing market.
The housing market remains strong despite a surge in mortgage rates. However, the affordability challenge is becoming increasingly acute, and this could eventually lead to a slowdown in home price growth. The Fed’s actions on interest rates will be critical in determining the future direction of the housing market.
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