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Federal Housing Finance Agency (FHFA) report showed home prices
grew 6.3% on a yearly basis, up from a revised 6.2% the month
prior.
Annual price growth began to accelerate in June after declining
steadily since February 2022. Prices increased moderately by
0.3% on a month-to-month basis after climbing by 0.7% the month
before.
Rates on the most common home loan neared 8% in October,
reaching a two-decade high on the back of the Federal Reserve's
rate hike cycle.
The Fed left its policy benchmark interest rate unchanged for
three consecutive meetings, bolstering expectations of a closing
rate hike cycle and stoking a rally in the bond market.
The average rate on a 30-year fixed-rate mortgage fell below 7%
in December, as yields on mortgage-backed securities headed
down. Existing home sales have risen moderately since then,
gaining 0.8% in November and indicating softening rates may draw
sellers from the sidelines and open up inventory to prospective
buyers, a National Association of Realtors report released in
December showed.
"The lack of inventory in the housing market has continued to
affect the sector and has reduced the effects of higher mortgage
rates," said Eugenio Aleman, chief economist at Raymond James.
"This decline in mortgage rates is likely to push future HPI
readings higher as more buyers enter the market and the supply
of homes remains limited."
A separate national price index released by S&P Core Logic/Case-Shiller
showed home prices gained by 4.8% on a yearly basis in October,
the largest rate this year.
The Mid-Atlantic and New England regions experienced the largest
gains in October, of 9.9% and 9.7%, respectively, according to
the FHFA report. On a city basis, Detroit and San Diego posted
the largest annual growth in home prices, the Case-Shiller data
showed.
(Reporting by Amina Niasse; Editing by Chizu Nomiyama)
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