Recent indicators reflect continued weakness in home prices, with the Case-Shiller index registering a 0.3% drop in April, following a 0.2% decline in March. High mortgage rates near 7% and an uptick in housing supply have contributed to this ongoing slump. Thomas Ryan of Capital Economics notes that if this trend continues, it may indicate a deeper correction in the housing market. Although prices remain elevated year-over-year, their growth rate has slowed significantly, raising concerns over the future momentum of home sales.
"After falling in March, the further 0.3% m/m decline in house prices in April raises the risk that prices are entering a sustained downturn, as the market finally buckles under the weight of near-7% mortgage rates."
"Clearly, the existing homes market is losing momentum as demand remains anemic due to sky-high borrowing costs, while more people put their home up for sale, forcing sellers to adjust their price expectations."
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