The FHFA House Price Index was up 0.3% in February from January, in line with the pace of modest increases over the past 12 months. Year-over-year, the house prices continued their steady loss of upward momentum at up 4.9% from February 2018. Home prices remain on the rise, but at the slowest year-over-year pace since 4.8% in January 2015.
The housing market has cooled since the peaks of 2017 and first half of 2018. In part, pent-up demand was evident in those years as potential homebuyers had the confidence and higher incomes to commit to a home purchase at a time when mortgage interest rates were historically low. Since then, demand has folded in the face of rapidly rising prices and limited supplies of mid-priced units. The creep higher in mortgage interest rates did not help in the third quarter 2018 and the near-term peak just shy of 5% for a 30-year fixed rate mortgage in the fourth quarter brought home affordability further into question.
However, milder price increases and renewed lows for mortgage rates should help boost housing activity during the spring.
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