Mortgage Rates Skyrocket, House Prices Still Climb Like It’s 1999

Gorodenkoff /

In its latest report, the Federal Housing Finance Agency (FHFA) revealed that US single-family home prices maintained their upward trajectory in April, albeit at a slower pace than previous periods. This moderation is largely attributed to rising borrowing costs exerting downward pressure on housing demand, which in turn contributes to an increase in available properties.

According to the FHFA, national house prices edged up by 0.2 percent compared to the preceding month, following a flat performance in March. Over the past twelve months ending April, property values have appreciated by approximately 6.3%, down slightly from the 6.7% gain registered in March.

Anju Vajja, Deputy Director for FHFA’s Division of Research and Statistics, offered her insights into these developments, stating that house prices continued to rise in April. “However, the appreciation rate slowed in April amid a slight rise in both mortgage rates and housing inventory. The housing market, in general, began to show some signs of normalization.”

This slowdown comes against the backdrop of declining existing-home sales over three consecutive months, according to recent figures published by the National Association of Realtors. Furthermore, this decline can be linked directly to resurgent mortgage interest rates coupled with escalating property valuations, which are eroding buyer purchasing power. Notably, nationwide housing stock surged to levels unseen in almost twenty-four months.

Data sourced from leading mortgage financier Freddie Mac reveals that benchmark thirty-year fixed-rate mortgages reached a peak value of 7.22% towards the beginning of May before receding marginally to stand currently at around 6.87%. Despite retreating somewhat, prevailing lending terms still exceed those seen throughout corresponding intervals one year prior when they averaged roughly 6.67%.

Following impressive double-digit expansion within the nation’s residential investments sector during Q12023, there appears to be growing evidence suggesting the broader real estate landscape may indeed be entering calmer waters.

On a regional basis, all nine Census-designated areas documented notable yearly advances in median dwelling prices across April led primarily by robust performances witnessed within New England alongside the Mid-Atlantic corridor.