Home Prices Continue to Rise Despite Record Mortgage Rates
Home prices have continued to rise despite record mortgage rates, with a 4.8% annual gain in October. The housing market shows an upward trend despite high rates.
The latest data released on Tuesday reveals that even with mortgage rates reaching their highest levels in two decades, home prices have continued to climb. In fact, the S&P CoreLogic Case-Shiller Home Price Indices report a 4.8% annual gain in home prices nationwide for the month of October. This marks the fastest increase since December 2022. Additionally, prices saw a 0.6% gain on a seasonally adjusted basis compared to the previous month, just slightly slower than September's 0.7% increase.
Notably, the index measuring price changes in 20 major metropolitan areas across the country also experienced growth. In October 2022, there was a 4.9% rise from the previous year, along with a seasonally adjusted gain of 0.64% compared to September. While these figures fell slightly short of consensus estimates, which predicted a 5.1% rise over the year and a monthly increase of 0.65%, the upward trend is still evident.
During the same period, mortgage rates climbed to nearly 8%, as reported by Freddie Mac data. Despite this significant increase, the Case-Shiller data, when combined with home sales information from the National Association of Realtors, indicate that home prices remained firm, albeit at the expense of volume. In fact, closed existing-home transactions in October reached a 13-year low due to a decrease in available deals.
Brian D. Luke, head of commodities at S&P Dow Jones Indices' Real & Digital assets, commented on this phenomenon, saying, "Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher." He further added, "With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation."
As this story develops, stay tuned for further analysis on this significant trend in the housing market.