NEW YORK (MainStreet) New housing data shows the sharp rise in home prices may be starting to slow down.
The S&P/Case-Shiller Home Price Index, which measures home prices of 20 metropolitan cities, rose 1.15% in April, but is up 10.8% year-over-year. In March, the index was up 12.4% year-over-year. The index is about 19% below its summer 2006 peak, indicating just how inflated prices were pre-crisis.
The slowdown in the rise in home prices could be a boon to potential buyers, who have been sitting on the sidelines, discouraged by prices outside of their budgets. This, along with falling mortgage rates, may also bring more buyers to the current seller's market.
Mortgage rates have been on the decline, despite the Federal Reserve's continued scale back of its bond stimulus, which has kept interest rates low for years. Freddie Mac says the average rate on a 30-year fixed mortgage stand at 4.17%, compared to 4.20% from the week earlier and 3.93% from the same time last year. A year ago at this time was when the Fed hinted at tapering its stimulus, which pushed interest rates up. The tapering began in 2014 with a $10 billion monthly reduction in asset purchases.
But analysts don't think that's enough to boost the housing market.
"The biggest barrier for people buying homes is qualifying for a mortgage and the lack of supply of existing and new homes," says David Blitzer, chairman of the index committee at S&P Dow Jones Indices.