Burning U.S. housing market begins to cool as. Home prices in April were up 20.4% from a year ago, according to the latest S&P CoreLogic Case-Shiller index, down slightly from a 20.6% increase the previous month.
Abbey Omodunbi, senior economist for PNC Financial Services, attributed the decline to rising borrowing costs, declining consumer confidence and growing economic uncertainty as the Federal Reserve raises its benchmark..
In another sign, the housing sector may have peaked, sales of newly built homes and mortgage applications are also falling. Homeowners nationwide are starting to lower their asking price as demand softens, Redfin reported last month. The average rate on a 30-year fixed mortgage is now 5.81%, according to Freddie Mac, up from 3.1% at the start of the year.
“For buyers and sellers, the way forward will require greater flexibility in pricing, honing negotiation skills and recognizing that market conditions today are different than six months ago.” , said George Ratiu, senior economist at Realtor.com in a blog post. .
A slowdown in home prices will be good news for potential buyers. Still, with competition for properties easing slightly as rising mortgage costs and high home prices drive away some potential buyers, home hunters still face a tough market.
“Slower house price growth is to be expected given rapidly deteriorating affordability, caused by soaring mortgage interest rates,” said Matthew Pointon, senior real estate economist at Capital Economics, in a report. “Indeed, with the 30-year rate recently hitting 6%, affordability is now worse than at the height of the mid-2000s housing boom.”
Home prices have continued to rise this year, largely because housing demand outstripped supply after construction companies cut new home construction during the.
In the United States, homes in Tampa and Miami, Florida and Phoenix, Arizona posted the largest year-over-year price increases, according to Case-Shiller, with Tampa recording a 35% gain, 8%, followed by Miami at 33.3% and Phoenix at 31.3%.
Home prices continue to grow “at a double-digit pace, showing little sign of a substantial easing,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a report.
In contrast, mid-sized cities like Pittsburgh, Pennsylvania; Minneapolis, Minnesota; Cincinnati, Ohio; Kansas City, Missouri; and Buffalo, New York, offer some of the most affordable housing prices in the country,.