Published by FOX Business | May 2, 2022
Data recently released for February 2022 show that home prices continue to increase across the U.S. as limited supply and a race to lock in rising mortgage rates drove enticed buyers.
First American Financial Corporation chief economist Mark Fleming discussed where he believes home prices are going amid expected rate hikes from the Federal Reserve as a way to tame surging inflation.
Fleming, who leads an economics team responsible for analyzing and forecasting trends in the real estate and mortgage markets, weighed in on current mortgage rates during an interview with “Mornings with Maria.” His appearance on FOX Business comes as inflation accelerated to a new four-decade high in March and price hikes were widespread with shelter costs increasing 5% year-over-year and jumping 0.6% for the month.
Last month, the Labor Department said that the consumer price index (CPI) – which measures a bevy of goods including gasoline, health care, groceries and rents – rose 8.5% in March from a year ago, the fastest pace since December 1981, when inflation hit 8.9%. Prices jumped 1.2% in the one-month period from February, the largest month-to-month jump since 2005.
Mortgage rates dropped for the first time in seven weeks, according to latest data from Freddie Mac, with the 30-year fixed–rate mortgage falling to 5.1% as of April 28. Though the rates edged down slightly, they remain significantly higher compared to the same time last year.
The 30-year fixed-rate mortgage fell to 5.1% annual percentage rate (APR) for the week ending April 28, which is down from 5.11% the week before and up from 2.98% last year.
Fleming acknowledged that 5% has been a “big move” and noted that the number “should curtail demand and affordability in the housing market.”
He added that, from a historical perspective, “5% is still a pretty good mortgage rate.”
“And because there’s such a short supply of housing out there, even with the reduced demand due to the higher rates, it’s still imbalanced, so prices are not expected to decline,” Fleming said, noting that perhaps prices could “soften in terms of their pace of appreciation.”
“But we would need a lot higher mortgage rate to actually really curtail demand to the point that it would meet supply and actually drive prices down,” he continued.
Data released last week for February 2022 show that home prices continue to increase across the U.S. as limited supply and a race to lock in rising mortgage rates drove enticed buyers.