It doesn’t look like national home prices will slow down anytime soon.
Prices across the country went up by 6.5 percent in March year-over-year, according to the Wall Street Journal, which took its data from the S&P CoreLogic Case-Shiller National Home Price Index. The biggest gains were in western cities such as Seattle, Las Vegas and San Francisco, which saw respective jumps of 13 percent, 12.4 percent and 11.3 percent.
Economists expect the pace of price growth will go down this year due to the new tax law that reduces homeownership incentives and rising mortgage rates, which are making it more expensive to own a home. Freddie Mac recently reported that the rate for a 30-year mortgage rose from 3.99 percent at the end of 2017 to 4.66 percent last week, and they have so far gone up in 15 out of 21 weeks this year.
Home sales have already started to slow down, falling 1.4 percent in April 2018 compared to April last year. This was the second consecutive month that annual sales went down.
Low inventory is a major factor in price increases, as the supply of houses is close to its lowest level in decades. David Blitzer of S&P Dow Jones Indices told the Journal that prices will likely keep going up unless this changes.
“Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising,” he said. [WSJ] – Eddie Small