Home price gains peaked and began shrinking in April 2018. Coming down from April’s +6.6% gains, home price gains gradually slid to +4.4% in January 2019.
According to Dr. Frank Nothaft, chief economist with CoreLogic, no wonder home prices and sales lagged to levels not seen since August 2012. “The spike in mortgage interest rates last fall chilled buyer activity and led to a slow down in home sales and price growth,” said Nothaft.
In California, sales essentially took a time out in the fall of 2018. The combination of the highest home prices in the country and higher interest rates proved to be too much for buyers. Sales stalled to its slowest pace in over a decade.
Since November 2018, however, fixed-rate mortgage rates have dropped -0.6% and home price gains have retracted to the smallest gains since August 2012. .
Now sitting at 4.5%, Nothaft said, “(Mortgage interest rates) are lower than they were a year ago. “ And a year ago, price gains were in the 6% range annually.
Could our current interest rates end the home price chill seen during the fall of 2018 and into January 2019? Will spring homebuyers begin to compete again as they did last Spring for still slim pickings among entry-level home supplies?
CoreLogic’s president and CEO Frank Martell is optimistic. He told CNBC in a recent interview, “As we head into 2019, we can expect continued strong employment growth and rising incomes which could support a reacceleration on home-price appreciation later this year.”