Re/Max Advance Realty Real Estate Sales Associate Ryan Ratliff (center) shows Ryan Paredes (left) and Ariadna Paredes homes for sale April 20, 2023 in Cutler Bay, Florida.
Joe Raeder | Getty Images
House prices peaked last June and fell sharply at the start of this year. Now, they are steadily recovering.
Home prices in April were still down 0.2% from April 2022 levels, according to the S&P CoreLogic Case-Shiller National Home Price Index. On a seasonally adjusted basis, however, prices rose 0.5% month-on-month. Prices are now just 2.4% below their June 2022 peak.
Miami, Chicago, and Atlanta still had large increases in April, up 5.2%, 4.1%, and 3.5% year-on-year, respectively. On a year-over-year basis, home prices fell more in April than in March, in 17 of the top 20 cities. Boston, San Francisco and Cleveland saw slight increases.
A sharp rise in mortgage rates last summer sent prices down. However, interest rates remain high, and homebuyers appear to be adjusting to the new normal. Demand is strengthening.
“The continued recovery in home prices is broad-based,” Craig Lazzara, managing director of S&P Dow Jones Indices, said in a release.
He added: “If I were trying to make the case that the decline in house prices that started in June 2022 has clearly ended in January 2023, then the April data would support my argument.” “Whether we will see this in the coming months Further support for this view will depend on how the market responds to the challenges posed by current mortgage rates and the potential for continued economic weakness.”
Home prices rose in all 20 cities in April before seasonal adjustment, as did March. House prices rose in 19 cities in April, compared with 14 cities in March, seasonally adjusted data showed.
The average rate on a 30-year fixed mortgage is still hovering in the high 6% range, more than double what it was in the two years before the pandemic when homebuyers soared.
However, buyers are still coming in. But they face an extremely low inventory of homes for sale. This is partly because the vast majority of homeowners have mortgage rates in the 3% range, making them less likely to sell their home and buy another at a higher rate.
“Despite falling affordability, home price trends are locked in a tug-of-war as tight buyer budgets and limited inventory force competition,” Danielle Hale, chief economist at Realtor.com, said in a release. “With one in seven homeowners unable to sell due to high mortgage rates, the number of new listings lags far behind previous years, forcing buyers to continue to make the best offers, even as home sales are lower than a year ago 20% of the year.”