ICE Sees Rate Decreases Providing Relief Next Year
Home price growth continued to show resiliency in November. Demand also edged higher, as ICE Vice President of Enterprise Research Andy Walden explains, with lower interest rates providing some much-needed affordability relief.
“While annual home price growth continued to climb in November, much of that is being driven by residual effects of falling prices in late 2022 and the strong growth seen earlier this year,” said Walden. “Price growth has been much more modest in recent months, which should help to moderate that annual growth rate as we make our way through early 2024.”
The ICE Conforming 30-year Fixed Mortgage Rate Lock Index, which peaked at 7.799% on Oct. 25, was at 6.628% as of Dec. 27, down by more than a percentage point. The last time rates were this low was in May.
“Rate relief has also nudged both home affordability and purchase demand in the right direction after hitting pandemic-era lows in recent months, with the prospect of further improvement in both as we make our way into the new year,” Walden said. “In simple dollars and cents, it requires $279 less per month to purchase the median priced home when compared to late October. Given that improvement, it’s no surprise mortgage applications have risen in recent weeks, hitting their highest adjusted levels since early September.”
Prices varied regionally, with markets in the Northeast, led by Hartford, Conn. (+0.85%), and Providence, R.I. (+0.50%), seeing the largest gains on a seasonally adjusted basis, followed by Atlanta (+0.42%), Miami (+0.40%), Boston (+0.40%), Buffalo, N.Y. (+0.40%), Philadelphia (+0.38%), San Diego (+0.37%), Chicago (+0.36%) and New York City (+0.33%).
At the other end of the spectrum, seasonally adjusted prices eased in nearly a quarter of markets, with Portland, Ore. (-0.38%), Minneapolis (-0.35%), Austin (-0.35%), San Antonio (-0.27%), and New Orleans (-0.24%) posting the largest declines, followed by Seattle (-0.20%), Phoenix (-0.20%), Houston (-0.17%), Birmingham (-0.15%), Denver (-0.15%), Dallas (-0.10%), and San Francisco (-0.02%).
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