How Much Did Home Prices Cool Last Year?

In 2021, home prices set a record. According to the S&P Case-Shiller Home Price Indices, they were 19 percent higher than they were the year before. That was the largest annual home price gain in the 35-history of S&P's index. Last year, though, prices slowed, and with S&P's latest release we know just how much. The index found that, after peaking in June, home prices ended the year up 5.8 percent from the previous year.
Craig J. Lazzara, managing director at S&P, says prices started cooling halfway through 2022. “The cooling in home prices that began in June 2022 continued through year end, as December marked the sixth consecutive month of declines for our National Composite Index,” Lazzara said. “For 2022 as a whole, the National Composite rose by 5.8 percent, the 15th best performance in our 35-year history, although obviously well below 2021's record-setting gain.” Depending on where the economy and mortgage rates head from here, Lazzara said its prices could continue their cooling trend this year.
S&P Dow Jones Indices


Affordability Gains Send Signings Higher

When a contract to buy a home is signed, that home's sale is considered pending until it eventually closes weeks later. During this period, the details of the sale and financing are finalized. The lag between signings and closings makes pending sales an excellent predictor of future home sales. That is why the National Association of Realtors tracks them each month. According to their most recent report, pending home sales increased 8.1 percent in January. It was the second consecutive increase and the largest monthly gain since June 2020.
Lawrence Yun, NAR's chief economist, says affordability was behind the improvement. “Buyers responded to better affordability from falling mortgage rates in December and January,” Yun said. Still, despite the bump, contract signings remain well below year-before levels. Yun believes home sales activity is nearing a bottom and will see incremental improvements later in the year. 
National Association of Realtors

New Home Sales Start the Year Up 7 Percent

Sales of newly built homes were rising at the end of last year and continued to increase once 2023 arrived. In fact, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, new home sales rose 7.2 percent in January – and that is following an upward revision of December's numbers. The increases were fueled by falling mortgage rates, which provided relief to winter home shoppers.
What does this mean to the average buyer? Well, any increase in new home sales is good news for buyers, since it encourages builders to build more new homes, which adds supply to the housing market and moderate's prices for both new and existing homes. Right now, the inventory of homes for sale remains lower than historically normal. Rising new home sales is a positive sign for the market and buyers hoping to find a house this spring.
United States Census Bureau  

Inflation Concerns Push Mortgage Rates Higher


According to the Mortgage Bankers Association's Weekly Application Survey, average mortgage rates moved higher last week across all loan categories. Rates were up for most loans. It was the third consecutive weekly increase. Joel Kan, MBA's vice president and deputy chief economist, says inflation concerns are behind the upward trend. “Data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates,” Kan said.
With rates moving higher, demand for mortgage loan applications has slowed, dropping 5.7 percent from one week earlier, including a 6 percent decline in demand for home purchase loans. The MBA's weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.
Mortgage Bankers Association

The Team USA Real Estate @ RE/MAX Executives 


Posted by Abuzar Waleed on


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