Mortgage Rates Are Falling, so Why Are Home Prices Still Rising?
Mortgage rates spiked in late October to a 20-year high of 7.08% for a 30-year fixed-rate loan before falling to an average of 6.49% for the week ending Dec. 1, but that slight boost in affordability isn’t enough to lure buyers back into the for-sale market. Even without a boost in demand, home prices are resurging after tapering off for the last several weeks.
For the week ending Nov. 26, home prices were 12.2% higher than the same week a year earlier, though during the previous week, that annual growth rate was just 11%, according to Realtor.com.
“Housing data in the week that includes the Thanksgiving holiday show that the housing market continues to evolve, but not always as expected,” explains Realtor.com Chief Economist Danielle Hale in her weekly analysis.
“Growth in the typical asking price of homes picked up from last week for the first time in seven weeks,” Hale notes, but suspects this is likely to be an “aberration.”
Nonetheless, she says, “It’s a reminder that prices can be sticky.”
“Sticky,” it turns out, is a technical term economists use “to describe variables that are resistant to change, particularly when that change is to the downside,” according to Hale.