Home prices surged again in the third quarter as home shoppers butted heads because of low inventory.
Annual single-family home price growth increased annually and quarterly from Q3 2022 to Q3 2023, according to Fannie Mae’s Home Price Index.
Price growth rose 2% quarter-over-quarter and was up 5.3% YOY, showing home price appreciation remains resilient amid stock shortages. The index measures the average quarterly price change for all single-family properties in the United States, excluding condos.
“Slightly slowing house price growth may reflect in part the affordability impact of the higher mortgage rate environment – even though prices were still solidly higher this past quarter than a year earlier,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
“We’re now in the fourth quarter, when house price appreciation typically slows, and with interest rates both higher and more volatile, it would be reasonable to expect some additional slowing in price appreciation, but the ongoing supply problems continue to drive the larger affordability challenge.”
Rates nearing 8% are forcing many would-be buyers out of the market, leading to less competition on the few homes for sale.
A report from Zillow found that prices slipped in September, the first monthly decrease since February.
“While attractive listings are still moving at a brisk clip, competition among buyers is fading quickly due to the shock of mortgage rates on top of normal autumn seasonality,” said Jeff Tucker, Zillow senior economist.
Zillow noted that inventory may start to shake out sooner rather than later, as many homeowners with “rate lock-in” find they can’t afford to wait out the market any longer. For example, one in ten home sellers are moving because they’ve been called back to the office. These sellers don’t have the luxury of waiting to see if rates or home prices will drop at the start of 2024.
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