Home prices hit a new record in April. Housing shortageThis is despite rising mortgage rates putting home buying out of reach for more Americans.
The S&P CoreLogic Case-Shiller index showed Tuesday that national inflation rose 6.3% year-over-year in April, down from 8.3% the previous month.
On a monthly basis, prices rose 0.3%, according to the index.
“For the second consecutive month, domestic stock indexes have surpassed their all-time highs by more than 1%,” Brian Luke, head of commodities, real and digital assets at S&P DJI, said in a statement. “As we head into summer, markets are at record highs, once again testing their resilience against historically active periods.”
The composite index for 10 cities, including Los Angeles, Miami and New York, rose 8% from a year ago, up from an 8.3% increase in March.
The composite index for 20 cities, which also tracks home prices in Dallas and Seattle, rose 7.2% from a year ago, down from 7.5% the previous month.
Prices rose in about half of the 20 major metropolitan areas tracked by the index.
“Last month’s all-time highs were reached as price growth accelerated across all 20 markets,” Luke said. “More than half of the markets have seen price growth accelerate on a monthly basis this month.”
The largest price increase again occurred in San Diego, which recorded a 10.3% increase over the previous year.
This was followed by New York and Chicago, with increases of 9.4% and 8.7%, respectively.
Portland, Oregon, had the smallest home price growth in April, at just 1.7% year-over-year.
The Case-Shiller Index is released with a two-month lag, so it may not reflect the latest market trends.
There are a variety of driving forces behind the rise in house prices.
Years of under-construction created a nationwide housing shortage, a problem that was then exacerbated by soaring mortgage rates and the cost of construction materials.
Rising mortgage rates over the past three years have also created a “golden handcuff” effect on the housing market.
Sellers who locked in record-low mortgage rates of less than 3% at the start of the pandemic are reluctant to sell, further restricting supply and leaving eager would-be buyers with few options.
Economists predict mortgage rates will remain high into 2024 and will only start to fall once the Federal Reserve starts cutting rates.
Still, interest rates are unlikely to return to the lowest levels seen during the pandemic.
