US House Price Growth Slows in March, FHFA Reports
In a recent report released by the Federal Housing Finance Agency (FHFA), it was revealed that U.S. house price growth experienced a significant slowdown in March. This deceleration is believed to be a result of the increasing mortgage rates that have started to impact the demand for housing in the country. The data shows that house prices only edged up by 0.1% in March, following a substantial 1.2% surge in February. Year-over-year, prices still saw a healthy increase of 6.7% in March, although this was slightly lower than the 7.1% growth seen in February.
Impact of Rising Mortgage Rates on Housing Market
The slowing down of house price growth in March can be attributed to the rising mortgage rates that have been steadily climbing towards 7% for the popular 30-year fixed-rate mortgage. This has led to a decrease in existing home sales, as potential buyers are deterred by the higher borrowing costs. However, with housing inventory remaining significantly below pre-pandemic levels, it is expected that house prices will continue to stay elevated in the near future. The report also highlights that house prices saw a 6.6% increase in the first quarter of this year compared to the same period in 2022, and a 1.1% increase from the fourth quarter of last year.
Expert Insights and Future Outlook
Anju Vajja, the deputy Director for FHFA’s Division of Research and Statistics, commented on the findings of the report, stating that despite the challenges posed by high mortgage rates, U.S. house prices have been growing steadily in the first quarter of the year. The persistent low inventory of homes for sale has continued to contribute to the appreciation of house prices, outweighing the impact of rising borrowing costs. Looking ahead, it is expected that the housing market will continue to see strong demand and elevated prices in the coming months.
In conclusion, the latest data from the FHFA indicates a notable slowdown in U.S. house price inflation in March, driven by the impact of rising mortgage rates on the housing market. Despite this deceleration, experts believe that the strong demand and low housing inventory will likely keep house prices elevated in the foreseeable future.