Home prices continue to rise, but cooled slightly in May, according to the latest Home Price Index (HPI) from CoreLogic.
Home prices increased 20.2% in April, marking the 124th consecutive month of increases, but down slightly from April’s record-high increase. While it is down, May marked the 16th consecutive month of double-digit home price increases. On a monthly basis, home prices increased 1.8% from April.
“Slowing home price growth reflects the dampening consequence of higher mortgage rates on housing demand, which was the intention,” CoreLogic Deputy Chief Economist Selma Hepp said. “With monthly mortgage expenses up about 50% from only a few months ago, fewer buyers are now competing for continually limited inventory.
“And while annual home price growth still exceeds 20%, we expect to see a rapid deceleration in the rate of growth over the coming year,” Hepp said. “Nevertheless, the normalization of overheated buying conditions should bring about more of a balance between buyers and sellers and a healthier overall housing market.”
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These areas saw the highest home price increases
All states along with Washington, D.C. posted an annual increase in home prices in May, according to CoreLogic’s report. In fact, 13 states posted gains of more than 20%.
Of the 20 largest metro areas in the U.S., Tampa, Florida, saw the highest increase from last year at 33.4% in May. Phoenix homes saw the second-highest gain at 28.7%. Both cities also had the highest gains in home value in April.
On a state basis, Florida and Tennessee saw the highest home price gains at 33.2% and 27.4%, respectively. On the other end, Washington, D.C. ranked last for home price appreciation at 4.3%.
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Home price growth to slow in coming months
Although home prices are surging now, CoreLogic predicts they will slow to an annual gain of 5% by May 2023 as rising mortgage rates and affordability challenges are expected to cool homebuyer demand.
The 30-year fixed-rate mortgage rate is currently resting at 5.7%, which is significantly higher than last year, when the average 30-year mortgage rate was just under 3%, according to data from Freddie Mac.
Rising rates could continue to cool homebuyer demand in the year ahead. But if you want to pull cash out of your home now before rates rise further, consider a cash-out refinance. Contact Credible to speak to a home loan expert and get all of your questions answered.