Annual home-price gains in the US eased in February as higher borrowing costs pressure buyers.
(Bloomberg) — Annual home-price gains in the US eased in February as higher borrowing costs pressure buyers.
Home prices nationally rose 2% from a year earlier in February, slower than the 3.7% increase in January, according to data from S&P CoreLogic Case-Shiller.
Markets across the country have cooled off after a sudden and rapid surge in borrowing costs sidelined many potential buyers. While demand in certain areas has started to pick up, a lack of listed homes is pressuring sales.
Craig Lazzara, managing director at S&P Dow Jones Indices, noted that the data captures a period before the banking turmoil in March.
“Although forecasts are mixed, so far the Federal Reserve seems focused on its inflation-reduction targets, which suggests that interest rates may remain elevated, at least in the near-term,” Lazzara said in a statement Tuesday. “Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.”
On a monthly basis, prices ticked up after seven months of declines. The national index climbed 0.2% in February from a month earlier, according to seasonally adjusted data.
Selling Season
February is typically when the real estate market’s busiest selling season starts to get underway. Mortgage rates eased after the start of the year, stoking demand. Inventory remained tight though as borrowing costs were still up sharply from 2021 and early 2022, dissuading homeowners with cheaper mortgages from listing.
The average for a 30-year, fixed loan was 6.39% last week, down just slightly from 6.48% at the start of the year, according to Freddie Mac data.
“While annual price growth is still slowing, a reversal from negative monthly growth to positive monthly growth shows signs that the normality of the spring home shopping season is returning,” said Nicole Bachaud, a senior economist at Zillow.
Geographical areas had some “stark” differences, according to Lazzara. Prices in Miami were up 10.8% year-over-year. Tampa, Florida, and Atlanta were also among cities with large increases. Meanwhile, certain cities on the West Coast have struggled. Prices in Los Angeles were down 1.3%.
“Real estate has always been local, but as the buyers and sellers adjust to higher mortgage rates and lower affordability, regional trends have diverged sharply,” said Danielle Hale, Realtor.com’s chief economist.
(Updates with details on February market starting in seventh paragraph, Zillow comment in ninth.)
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