By Mike Sunnucks | Rose Law Group Reporter
Home prices jumped 20.2% in May compared to a year ago though higher interest rates are expected to take annual price gains down to 5% by next year, according to real estate analytics firm CoreLogic.
The Federal Reserve has raised interest rates three times so far this year and is expected to hike them more to battle 40-year highs with inflation.
“Slowing home price growth reflects the dampening consequence of higher mortgage rates on housing demand, which was the intention,” said Selma Hepp, deputy chief economist at CoreLogic. “With monthly mortgage expenses up about 50% from only a few months ago, fewer buyers are now competing for continually limited inventory. And while annual home price growth still exceeds 20%, we expect to see a rapid deceleration in the rate of growth over the coming year. Nevertheless, the normalization of overheated buying conditions should bring about more of a balance between buyers and sellers and a healthier overall housing market.”
Tampa had the largest year-over-year home price gains at 33.4%. Phoenix was second at 28.7%, according to CoreLogic. The two Sunbelt markets also posted the largest year-over-year price gains in March and April.
Florida and Tennessee posted the highest home price gains, 33.2% and 27.4%, respectively. Arizona ranked third with a 27.3% year-over-year jump.