WASHINGTON (Reuters) – U.S. single-family home prices slowed further at an annualized rate in January, which coupled with lower mortgage rates may lure buyers back into the housing market.
The CoreLogic Case-Shiller National Home Price Index, which covers all nine U.S. census tracts, rose 3.8% in January from a year earlier, marking the ninth straight annual home price gain, data from Standard & Poor’s on Tuesday showed month slowed down. That followed a 5.6 percent gain in December.
The modest rise also reflects last year’s sharp rise being removed from the calculation. On a seasonally adjusted basis, monthly prices fell 0.2% in January.
Residential investment contracted for seven straight quarters, the longest stretch since the housing bubble burst, as the housing market was squeezed by the Federal Reserve’s aggressive interest rate hikes to curb high inflation 2007-2007 The Great Recession.
But mortgage rates have resumed their downward trend and the Federal Reserve said last week it was about to pause further increases in borrowing costs after the collapse of two regional banks weighed on financial markets.
“Given the reaction of the mortgage investor market since the Fed’s March meeting, home price growth may surprise upside if mortgage rates remain favorable, especially if supply continues to be constrained space,” said Selma Hepp, chief economist at CoreLogic.
“However, continued volatility in mortgage rates and the impact of the banking crisis could dampen the spring home-buying season, especially if tighter credit affects mortgage availability and consumer confidence takes another hit.”
Annual home price growth remained strong in the Southeast, with double-digit gains in Miami and Tampa. Atlanta and Charlotte also saw steady home price increases. Companies are offering employees the flexibility to work from anywhere during the COVID-2007 pandemic, leading to an influx of people from the South.
Home prices continue to fall in the West. Annual home price falls in San Diego, Portland, San Francisco and Seattle. Housing prices in the area have experienced rapid growth in previous years.
A separate report from the Federal Housing Finance Agency on Tuesday showed that home prices rose 5.3%, further confirming the cooling in overall home price inflation The months through January followed a 6.7 percent gain in December. House prices rose 0.2% mom after falling 0.1% in December.
