With mortgage rates now beginning to move, those in the market felt the first effects of rising rates in December.
According to Housing Wire, information from First American Financial Corp., a provider of title insurance, settlement services and risk solutions for real estate transactions, shows that the company’s price index rose 6.2 percent from November to December and 8 percent when compared to December 2015.
“Real purchasing-power adjusted house prices surged more than 6% month-over-month in December, the first full month to see the impact of the surge in mortgage rates after the election and the most recent FOMC rate increase,” said Mark Fleming, First American Chief Economist.
“This interest rate surge lead to the first year-over-year decline in consumer house-buying power in two and a half years. Add declining purchasing power because of the jump in mortgage rates, and affordability for first-time homebuyers declines.”
The price index measures price changes of single-family homes throughout the U.S., adjusted for the impact of income and interest rate changes on consumer house-buying power over time and across the United States at state, metropolitan area and national levels.
Even though the rates are up, the price index shows that real home prices are still 33.1 percent below their housing-boom peak and 10.1 percent below price levels in January 2000.
“The decrease in affordability seen in December was widespread, impacting all but one of the markets we track,” said Fleming.
“Low inventory of homes for sale is creating increased competition in the market and pushing nominal prices higher.”
For more on housing, including the National Association of Realtors January sales report, click here. ##
(Image credits are as shown above.)
Submitted by RC Williams to the Daily Business News for MHProNews.
