Home Prices Hit New Peak While Rates Stagnate – NMP Skip to main content

Home Prices Hit New Peak While Rates Stagnate

Phil Hall
Nov 29, 2016
It appears that the transitional aspect of September went beyond the change from summer to autumn—in the housing world, September also saw a transition from high home prices to even higher home prices

It appears that the transitional aspect of September went beyond the change from summer to autumn—in the housing world, September also saw a transition from high home prices to even higher home prices.

The latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index recording a new peak in September, besting the level set two months earlier: The National index reported a 5.5 percent annual gain in September, up from 5.1 percent in the previous month. The 10-City Composite posted a 4.3 percent annual increase, up from 4.2 percent one month earlier, while the 20-City Composite reported a year-over-year gain of 5.1 percent, unchanged from August.

Before factoring in a seasonal adjustment, the National Index posted a month-over-month gain of 0.4 percent in September while both the 10-City Composite and the 20-City Composite posted a 0.1 percent increase. After a seasonal adjustment, the National Index recorded a 0.8 percent month-over-month increase, the 10-City Composite posted a 0.2 percent month-over-month increase and the 20-City Composite reported a 0.4 percent month-over-month increase. Fifteen of the 20 cities tracked in this data analysis reported increases in September before a seasonal adjustment, but all 20 cities recorded home price increases after a seasonal adjustment.

Among the major metro markets, Seattle and Portland experienced the greatest year-over-year price increases with 11 percent and 10.9 percent spikes, respectively.

“The new peak set by the S&P Case-Shiller CoreLogic National Index will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “While seven of the 20 cities previously reached new post-recession peaks, those that experienced the biggest booms—Miami, Tampa, Phoenix and Las Vegas—remain well below their all-time highs. Other housing indicators are also giving positive signals: sales of existing and new homes are rising and housing starts at an annual rate of 1.3 million units are at a post-recession peak.”

But while home prices were hitting new heights, interest rates on conventional purchase-money mortgages were going nowhere. The Federal Housing Finance Agency reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 3.62 percent for loans closed in late October, barely higher than the 3.61 percent level in September. The average interest rate on all mortgage loans was 3.60 percent last month, unchanged from September, while the average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 3.76 percent, slightly higher from the 3.73 percent level one month earlier. The effective interest rate on all mortgage loans was 3.72 percent in October, down slightly from September’s 3.73 percent.

One significant increase, however, involved the average loan amount for all loans: $312,700 in October, up $9,800 from $302,900 in September.

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