Home Prices Rise, Squeezed by Fewer Listings

Home prices rose in May as sellers held out on listing their homes, constraining supply

Despite elevated mortgage rates, the S&P CoreLogic Case-Shiller 20-city home-price index rose 0.5% in March, as compared with the previous month.

Home prices were strongest in the Southeast, while prices in the West continued to drag. Though buyer demand has outpaced supply in March, surging mortgage rates may dampen home sales. The rate for the 30-year mortgage in May is over 7%, according to Mortgage News Daily.

Year-over-year appreciation was down 1.1%, a dip after home prices rose 0.4% in February. The 20-city index peaked in June 2022.

A broader measure of home prices, the national index, rose 0.4% in March compared with February and was up 0.7% over the past year. All numbers were seasonally adjusted.

Big picture:

The housing market is being squeezed by a lack of supply.

There aren’t enough homes listed for sale on the market, as home sellers see no incentive in giving up their ultralow mortgage rates for a new home loan with a 7% rate.

But rising rates could soon dampen demand as well, as buyers may find rising costs prohibitive to purchasing a home.

The housing sector is trying to boost both demand and supply: While home builders add to supply with new construction, which has boosted sales of new homes, mortgage lenders are also offering incentives, such as buyers only having to make a 1% down payment. The National Association of Realtors is proposing changes to existing tax policy to boost supply.