April Sees Third Consecutive Rise in Home Prices, Reports S&P Case-Shiller Index
The S&P CoreLogic Case-Shiller national home price index shows that April’s home prices were still down 0.2% from April 2022. However, after accounting for seasonal variations, they were 0.5% greater monthly, and prices are now just 2.4% below their June 2022 peak.
Certain cities, such as Miami, Chicago, and Atlanta, witnessed notable price gains in April, with 5.2%, 4.1%, and 3.5%, respectively. However, the April price declines were more significant in 17 out of the top 20 cities analyzed than in March. Despite the recovery, the housing market faces challenges due to high mortgage rates and the possibility of economic weakness. The demand for homes remains strong, but limited inventory and reduced affordability create competition among buyers, leading to the need for competitive offers in the market.
Overall, the recovery in home prices has been broad-based. While April’s data supports the argument that the previous price decline may have ended, future trends will depend on the market’s ability to navigate current challenges.
Listing Prices Decline, Home Market Time Increases by Almost 2 Weeks
Due to the current market conditions and high mortgage rates, the median listing and sales prices in the real estate market are declining. Redfin’s data shows that median sales prices have been declining steadily since February 2023, and a revised forecast suggests additional price drops, fewer homes on the market, and a slower sales pace. Even when prices are down, buying costs are still high because of inflation and rising interest rates.
In an unexpected turn of events, Redfin reveals a 0.9% decrease in the median listing price year over year, the first decrease of this nature in their data history. Housing buyers’ hesitation results from worries about inflation, skyrocketing housing prices, rising interest rates, and uncertainty brought on by the unemployment rate.
Overall, the housing market faces significant obstacles driven by inflation, rising interest rates, and a shortage of new listings. Buyers are delaying their purchasing plans, contributing to slower inventory growth and longer market times for homes.
Existing-Home Sales Inch Up by 0.2% in May
According to the National Association of REALTORS®, existing-home sales slightly climbed in May. The four major U.S. regions saw a range in sales, with the South and West reporting gains and the Northeast and Midwest suffering setbacks. Sales decreased year over year in each of the four regions. The total number of existing-home sales rose by 0.2% in May, reaching a seasonally adjusted annual rate of 4.30 million, but this represented a significant drop of 20.4% compared to May 2022.
Housing inventory increased by 3.8% from April, totaling 1.08 million units, but remained down by 6.1% compared to the previous year. The supply of unsold inventory stood at a 3.0-month level, slightly higher than in previous months. The median price for existing homes in May was $396,100, showing a decline of 3.1% compared to May 2022, with price changes varying across regions.
First-time buyers accounted for 28% of sales in May, a slight decrease from April but an increase compared to May 2022. Cash sales comprised 25% of transactions, while individual investors or second-home buyers represented 15% of home purchases. Distressed sales, including foreclosures and short sales, accounted for 2% of sales in May.
According to NAR Chief Economist Lawrence Yun, mortgage rates remained relatively steady, influencing the direction of home sales. However, rates were higher than the previous year, with the 30-year fixed-rate mortgage averaging 6.69% as of June 15, 2023.
Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.