Home Prices Still Hot

Market Update Mortgage Tips

Home Prices Feeling the Heat

CoreLogic released their Home Price Index report for April, showing that home prices increased 2.1% from March. Prices also rose 13% year over year, which is up from the 11.3% annual gain reported for March.

Within the report, the hottest markets once again were Phoenix (+21%), San Diego (+16%) and Denver (14%).

CoreLogic forecasts that home prices will rise 1.1% in May, which is the same level they forecasted for April. On an annual basis, they’re predicting that home prices will rise 2.8% in the year going forward. This is surprising considering they’re forecasting a 1.1% rise in the next month alone and their figures are still lower than most forecasts out there.

Also of note, CoreLogic says that Baby Boomers are staying in their homes for a median of 13 years, which is 50% longer than the previous generation. This is another factor impacting inventory along with the high labor and material costs builders are facing.

Fed Keeping On With Purchases

Last Thursday, New York Fed President John Williams made headlines when he said that he felt the economy has improved and is on a good trajectory, but that we are still a ways off from reaching the “substantial further progress” that would be needed to adjust the Fed’s purchases of Mortgage Bonds and Treasuries. And, as we noted above, we likely won’t see meaningful improvement in the labor sector until after schools and childcare facilities open back up fully and until after extended benefits expire.

While other Fed members have expressed differing opinions, Williams is one of the Fed’s most powerful members. As a result, Mortgage Bonds responded positively on Friday to his comments from Thursday that the Fed is still a way off from tapering their purchases.

 

Information Reference: MBS Higway