US home prices decline as interest rates rise

• Prices in ten big cities rose 19.7 percent annually, compared to 19.5 percent a month earlier.
•  Average 30-year mortgage rate was 5.8% last week, up from 3.2% at beginning of year.
• Tampa, Miami, and Phoenix led all other cities in annual home price gains.

Higher mortgage rates may have impacted purchasers’ finances and begun to cool the market, resulting in a moderation in US home prices.

According to the S&P Corelogic Case-Shiller index, home prices increased 20,4% year-over-year in April, which was less than the yearly increase of 20,6% recorded in March.

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“April 2022 showed initial (although inconsistent) signals of a slowing in the growth rate of US home values,” said Craig Lazzara, managing director at S&P Dow Jones Indices, adding that mortgage financing had just recently become more expensive at the time the April data was obtained.

“A more difficult macroeconomic climate may not sustain spectacular home price rise for long,” he warned.

Prices in ten big cities rose 19.7 percent annually, compared to 19.5 percent a month earlier. The annual gain for the 20-city index increased to 21,2% from 21,1% a month earlier.

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As the pandemic trend for roomy homes in midsize cities and suburbs in the sunbelt remained, Tampa, Miami, and Phoenix led all other cities in annual home price gains.

High home prices and rising mortgage rates will reduce the affordability of homeownership for new purchasers, which might dampen demand and slow price increases in the coming months.

According to Freddie Mac, the average 30-year mortgage rate was 5.8% last week, up from 3.2% at the beginning of the year.