The mortgage giant’s quarterly Home Price Index shows national home prices were up 1 percent during the first quarter of 2023 compared to the final three months of 2022.

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Home prices rose slightly during the first three months of the year as a shortage of listings kept prices from falling despite a rapid runup in mortgage rates, Fannie Mae’s top economist said Tuesday in releasing the mortgage giant’s latest Home Price Index.

Fannie Mae’s quarterly Home Price Index, which tracks single-family home prices at the national level, shows that after adjusting for seasonal effects, home prices rose by 1 percent during the first quarter of 2023 compared to the final three months of 2022. Looking back a year, home prices increased at a non-seasonally adjusted annual rate of 4.7 percent, down from 8.6 percent annual growth during the fourth quarter of 2022.

National home price appreciation cools

Source: Q1 2023 Fannie Mae Home Price Index

Doug Duncan

“As expected, the annual rate of increase in home prices has slowed dramatically in response to the rapid and significant increase in interest rates,” said Fannie Mae Chief Economist Doug Duncan in a statement. “Still, the fact that prices rose slightly in the first quarter is evidence of significant pent-up mortgage demand, despite ongoing affordability constraints. Even though mortgage rates remain elevated compared to the previous few years, the acute lack of housing supply remains supportive of home prices.”

Data compiled by Redfin shows that during a four-week period ending April 2, new listings were down 21.8 percent from the same time a year ago — one of the most significant annual drops since the beginning of the pandemic.

But a weekly survey of lenders by the Mortgage Bankers Association shows demand for purchase loans rose sharply during the week ending April 7, even after adjusting for the expected seasonal boost from the spring homebuying season, as mortgage rates remained below a 2023 peak seen in early March.

Duncan noted that the shortage of homes for sale is currently being exacerbated by the so-called “lock-in effect,” which “continues to disincentivize huge numbers of households with low mortgage rates from listing their homes,” he said.

Fannie Mae’s latest National Housing Survey found that only 20 percent of Americans surveyed in March said it’s a good time to buy, while 79 percent said it was a bad time to buy. Homeowners sharing this belief frequently cited unfavorable mortgage rates as the primary reason for their pessimism, Fannie Mae Deputy Chief Economist Mark Palim said of the survey results.

Housing industry economists think mortgage rates have peaked and will trend down later this year and next as inflation cools, but most consumers surveyed by Fannie Mae last month (85 percent) said they expect mortgage rates will go up or stay the same over the next 12 months.

Mortgage rates hit 2023 peak on March 8

The Optimal Blue Mortgage Market Indices, which track daily ups and downs in mortgage rates using rate lock data, show rates on 30-year fixed-rate conforming mortgages have rebounded from early April but remain below a 2023 peak of 6.84 percent seen on March 8.

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Email Matt Carter

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