Why House Prices Are Rising Again (and What It Means for You)

This year, US house prices will fall less than previously expected. House prices in March were 0.7% higher than in March 2022, the S&P CoreLogic Case-Shiller House Price Index (a leading measure of US residential real estate prices) said on Tuesday . Another report from the Federal Housing Finance Agency also showed an increase in house prices in March by 0.6% compared to February. If you’re looking for a new home, here’s what these numbers mean for you.

What does the housing market look like now?

March results show that the fall in house prices that began in June 2022 may have come to an end. “Two months of rising prices will not lead to a definitive recovery,” Craig J. Lazzara, managing director of S&P DJI, said in this week’s edition . “The problems associated with current mortgage rates and the continued possibility of an economic downturn are likely to remain a dampening factor on home prices for at least the next few months,” he added.

For now, higher prices are here to stay. This is coupled with widespread expectations that interest rates will remain high, according to Reuters . These high mortgage rates are scaring sellers away from their current rates, leading to lower supply and more competition among buyers. In other words, this is Economy 101: as long as supply is low and demand is high, house prices will also remain high.

At the same time, these high mortgage rates could limit demand as potential buyers no longer even consider buying a home in the current market. By comparison, the 30-year mortgage rate is still above 7% in May. And, as we explained earlier , know that your mortgage rate makes a huge difference to whether you can afford the monthly payments. As ABC News explains , these rates (combined with higher home prices) mean that mortgage payments have risen by hundreds of dollars.

To find out how much this higher rate will affect your monthly payments, you can experiment with an online mortgage calculator . What’s more, here are our seven deadly sins of buying your first home .