Home Buyers Betting Big on Rising Mortgage Rates
Demand is steady for those wanting to get in before costs spike, expectedly.
Buoyed by buyers wanting to beat rising mortgage rates, single-family home growth continues to move higher according to the CoreLogic Home Price Index (HPI) and HPI Forecast for April 2022, released this week.
“The record growth in home prices is a result of a scarcity of for-sale inventory coupled with eager buyers who want to purchase before mortgage rates go higher,” according to the report.
In April, nationwide, it was another record-high year-over-year, marking the 123rd straight month of gains. Approximately 70% of U.S. homes sold for more than asking price this spring.
Home Price Appreciation to Cool by April 2023
The report suggested that higher mortgage rates will likely slow buyers’ demand in the coming months, and annual home price appreciation should cool to 5.6% by April 2023.
“The record growth in home prices is a result of a scarcity of for-sale inventory coupled with eager buyers who want to purchase before mortgage rates go higher,” Patrick Dodd, president and CEO at CoreLogic, said in prepared remarks.
“Most buyers who closed on their home in April had locked in their mortgage rate in February or March when rates were lower than today. With 30-year fixed mortgage rates much higher now, we expect to see waning buyer activity because of eroding affordability. Consequently, our forecast projects slowing price growth over the coming year.”
CoreLogic reported that home prices (including distressed sales) increased 20.9% in April 2022, compared to April 2021 and home prices increased by 2.6% compared to March 2022 on a month-over-month basis.