Despite afforability challenges, First American Data & Analytics found that August marked the eighth month of consecutive price increases.
Home prices increased by 0.7% from July to August reaching a new peak and year-over-year prices saw an increase of 5.6%.
“Rising mortgage rates decrease affordability for buyers, but also increase the rate lock-in effect that is currently restricting supply. The net result is rising prices, even as mortgage rates also increase," First American Chief Economist Mark Fleming said.
The five most populous states experienced the following year-over-year growth: California (+2.4 percent), Texas (+2.8 percent), Florida (+2.6 percent), New York (+1.4 percent), and Pennsylvania (+7.9 percent). The only state with a year-over-year decrease in the HPI is Nevada (-1.7 percent).
Those who are struggling the most in this high mortgage rate environment seem to be first-time homebuyers.
"The old adage of real estate being local includes sub-markets within a local area, particularly sub-markets defined by price. Changes in mortgage rates affect borrowers trying to buy their first ‘starter’ home differently than luxury buyers," said Fleming. “A pattern emerging within many local markets indicates the starter tier remains a strong sellers’ market with large year-over-year price gains, followed by strong performance in the mid-tier price range that is often outperforming the luxury tier. Limited supply, coupled with rising mortgage rates, impacts affordability and the financial incentive to sell across the income spectrum and is driving potential move-up home buyers to ‘down-filter’ toward lower priced homes in the starter and mid-price tiers."
