(HorizonPost.com) – According to the Black Knight Home Price Index, home prices in May hit a record high, increasing by 0.7 percent nationally compared to April, CNBC reported.
Home prices, which have been climbing since January, were 0.1 percent higher in May 2023 than they were in May 2022.
While the increase in mortgage interest rates cooled the overheated housing market in 2022, this year, home prices are once again increasing even with mortgage rates high, and those increases are accelerating every month.
Home prices began to drop last summer after the average rate for a 30-year fixed-rate mortgage more than doubled in six months. Prices continued falling until January 2023 when buyer demand returned but supply was very tight, leading some to suspect that homebuyers may have gotten used to higher mortgage interest rates.
In a recent interview on CNBC’s “Squawk on the Street,” Compass Real Estate CEO Robert Reffkin said the 7 percent mortgage rates are now considered the “new normal” and homebuyers are “accepting it.”
By May, a little over half of the country’s top fifty housing markets, primarily in the Northeast and Midwest, had either returned to previous price peaks or set new highs.
In the West, home prices remain weaker, particularly in cities that had an influx of home sales from people working remotely during the pandemic lockdowns. But even there, the prices are starting to heat up.
In San Jose, California, homes lost 10 percent of their value in 2022. But with inventory starting to drop, the prices in San Jose are beginning to increase, with prices rising 1.4 percent in May.
Other West Coast cities, including Los Angeles, San Diego, San Francisco, and Seattle also saw home prices rise in May.
Overall, supply nationwide is declining, with new listings down by around 25 percent compared to May 2022. Total inventory is about half of what it was before the pandemic lockdowns, which caused a massive boom in housing.
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