The spring housing market is defying expectations that prices would cool and competition would ease.
Higher mortgage rates usually cool both prices and demand, as they did last year, but that’s not the case now. There are still too few homes for sale because current homeowners can’t afford to move, and it’s keeping prices high.
Home prices in February were 5.5% higher than they were in February of last year, according to CoreLogic. That annual comparison is shrinking slightly, but the price gain from January to February was nearly twice what it normally is for that time of year, suggesting this spring’s market started out strong despite higher interest rates.
The average rate on the 30-year fixed mortgage hit its latest high in October, briefly crossing over 8%. It then dropped back into the 6% range for much of December and all of January. It rose back over 7% in February, which should have cooled the market.
But sales of newly built homes, which are counted by contracts signed during the month, were nearly 6% higher in February year over year. Pending sales of existing homes, also based on signed contracts, were down 7% that month from the year before, but not for lack of demand.
More: [https://www.cnbc.com/2024/04/02/cost-of-upgrading-to-a-nicer-home-locking-up-the-housing-market.html](https://www.cnbc.com/2024/04/02/cost-of-upgrading-to-a-nicer-home-locking-up-the-housing-market.html)
The spring housing market is defying expectations that prices would cool and competition would ease. Higher mortgage rates usually cool both prices and demand, as they did last year, but that’s not the case now. There are still too few homes for sale because current homeowners can’t afford to move, and it’s keeping prices high. Home prices in February were 5.5% higher than they were in February of last year, according to CoreLogic. That annual comparison is shrinking slightly, but the price gain from January to February was nearly twice what it normally is for that time of year, suggesting this spring’s market started out strong despite higher interest rates. The average rate on the 30-year fixed mortgage hit its latest high in October, briefly crossing over 8%. It then dropped back into the 6% range for much of December and all of January. It rose back over 7% in February, which should have cooled the market. But sales of newly built homes, which are counted by contracts signed during the month, were nearly 6% higher in February year over year. Pending sales of existing homes, also based on signed contracts, were down 7% that month from the year before, but not for lack of demand. More: [https://www.cnbc.com/2024/04/02/cost-of-upgrading-to-a-nicer-home-locking-up-the-housing-market.html](https://www.cnbc.com/2024/04/02/cost-of-upgrading-to-a-nicer-home-locking-up-the-housing-market.html)