by Will Kessler
U.S. home prices climbed to their highest point ever in October alongside nearly 8 percent 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 percent for the month of October when seasonally adjusted, or 4.8 percent year-over-year, higher than the 4 percent 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.”
The home market in Detroit saw the fastest growth, rising 8.1 percent for the year, followed by San Diego and New York, rising 7.2 percent and 7.1 percent, respectively, according to S&P Global. The Midwest and the Northeast saw the biggest gains in home prices, while the Southwest and West recorded more moderate gains.
Mortgage rates reached their highest point since 2000 on Oct. 26 at 7.79 percent and have since moderated slightly to 6.67 percent 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 percent for the year in November, far higher than the Federal Reserve’s 2 percent target. In response to the high inflation, the Fed has raised its federal funds rate to a range of 5.25 percent and 5.50 percent, the highest point in 22 years, which has also placed upward pressure on interest rates on all forms of debt, including mortgages.
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Will Kessler is a reporter at Daily Caller News Foundation.
Photo “Home for Sale” by Nick Bastian CCND2.0.
