Home Prices Hit New High In Nine Month Climb As Affordability Tumbles

U.S. home prices climbed to their highest point ever in October alongside nearly 8% mortgage rates, fueling home unaffordability for average Americans, according to data released Tuesday by S&P Global.

The Case-Shiller home price index, which measures home prices in 20 major metro markets, rose by 0.6% for the month of October when seasonally adjusted, or 4.8% year-over-year, higher than the 4% seen in the previous month, according to a release from S&P Global. The month-to-month growth resulted in the highest level of home prices in U.S. history, following nine months of consecutive increases.

“U.S. home prices accelerated at their fastest annual rate of the year in October,” Brian Luke, head of commodities at S&P Dow Jones Indices, said in the release. “Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher. With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation.”

Mortgage rates reached their highest point since 2000 on Oct. 26 at 7.79% and have since moderated slightly to 6.67% as of Dec. 21, according to the Federal Reserve Bank of St. Louis. Increasing prices and high interest rates have progressively reduced housing affordability, allowing a median-income household to afford a $737,392 house with a 30-year mortgage in December 2020, but only a $356,273 house as of August this year.

The price of housing has exceeded the general rate of inflation, which most recently rose 3.1% for the year in November, far higher than the Federal Reserve’s 2% target. In response to the high inflation, the Fed has raised its federal funds rate to a range of 5.25% and 5.50%, the highest point in 22 years, which has also placed upward pressure on interest rates on all forms of debt, including mortgages.

Republished with permission from The Daily Caller News Foundation.

• Article Source: The Daily Caller News Foundation