Home prices rose in May for the fourth consecutive month on the S&P CoreLogic Case-Shiller Home Price Index, but regional differences are widening.

The gains came despite a sharp rise in mortgage interest rates during the month.

Prices nationwide rose 0.7% month over month, seasonally adjusted. The index’s 10-city composite rose 1.1%, and the 20-city composite rose 1%.

Prices nationwide were still down 0.5% from May 2022, but only 1% below their June 2022 peak.

The 10-city composite fell 1%, year over year, slightly less than the 1.1% decline in the prior month. The 20-city index fell 1.7%, the same as the year-on-year decline in April.

“US home prices started to decline after June 2022, and the May data reinforced the case that the last month of decline was January 2023,” said Craig Lazzara, managing director at S&P DJI. “It is true that the price gains of the past four months could be capped by increases in mortgage rates or by general economic weakness. But the breadth and strength of the May report dovetails with an optimistic outlook for the months ahead.”

Still, Lazzara noted, “the regional differences are still striking,” with cities in the so-called Rust Belt outperforming the rest of the country. Prices in Chicago rose 4.6%. in Cleveland, 3.9%; and New York, 3.5% — making it the best performer. The Midwest took over the rule of the South as the most powerful region.

“If that sounds like an outlier to you, it does to me, too. It’s been five years a month since a cold-weather city took the lead (and that was Seattle, which wasn’t too cold),” Lazzara added.

Of the 20 cities, 10 saw prices fall in the year ending May 2023 versus the year ending April 2023 and 10 cities saw prices rise.

Cities in the West, where prices inflated the most, were the worst performers in May. Seattle, down 11.3%, and San Francisco, down 11%, were the worst.

Prices are going up again because supply is still so low. Existing homeowners are reluctant to sell, since most of them pay mortgage rates less than half of today’s rates. Demand has returned after the initial jump in mortgage rates, as buyers seem to be getting used to the new normal.

“The housing market remains unaffordable for many buyers, but some areas are seeing high levels of competition as a result of low selling inventory,” said Hannah Jones, Research Analyst for Realtor.com. “The current limited household equity means that many markets are experiencing competition reminiscent of the past few years.”

Correction: Home prices rose in May for the fourth consecutive month on the S&P CoreLogic Case-Shiller Home Price Index. An earlier version misspelled the number of months.

Mortgage rates last week hit their highest level since the end of May, which in turn affected mortgage demand.

Total mortgage application volume last week decreased 4.4% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand is now at its lowest level in a month.

The average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($726,200 or less) rose to 6.85% from 6.75%, with the score increasing to 0.65 from 0.64 (including origination fees) for loans of 20%. low premium.

While that was the average rate for the week, a separate survey from Mortgage News Daily showed that the rate was over 7% last Thursday. It has remained above that level since then, rising to 7.08% on Tuesday of this week.

As a result, mortgage demand to buy a home, which has been rising for three consecutive weeks, fell 5% during the week and was 22% lower than the same week a year ago.

“Rates are still more than a percentage point higher than they were a year ago, and housing affordability remains a challenge in many parts of the country,” Joel Kahn, MBA’s deputy chief economist, wrote in a statement. However, the average loan-to-request size fell to $423,500 – its lowest level since January 2023.

The decline in loan size, according to Kan, is likely driven by lower home purchases in some of the higher-priced markets and increased activity at some of the lower-priced levels.

Home loan refinance applications were down 4% for the week and were 30% lower than the same week a year ago. As the summer progresses, the year-over-year comparison is likely to shrink, as it did last summer when mortgage rates rose dramatically for the first time since before the pandemic, and thus refinancing demand fell off the high slope.

While the 30-year flat rate remained above 7% for the past week, it may be affected by employment data scheduled for release on Thursday and Friday. This could affect the Fed’s next moves, which are likely to include further rate hikes.

When Darius Livingston graduated from UC Davis two years ago, he knew his football career was over. Like most of his former teammates—and most college athletes—he wasn’t a pro.

Instead, Livingston went into commercial real estate, thanks to lessons he learned from a paid internship program that teaches young students the basics of finance, with a special focus on real estate investing.

The programme, Project Destined, is a social impact platform founded by Cedric Bobo, former director of The Carlyle Group.

Bobo made a name for himself in the real estate investment business and then decided to pay it in advance. The funding program was launched in 2016 mainly for high school students. He then expanded it to colleges, seeing the opportunity for both internships and jobs before and after graduation.

Keen to diversify its workforce, some of the largest real estate development, finance, and management companies have signed on to fund internships and student mentors. It includes names like Boston propertiesgraystar, brookfield, CBREAnd Residential propertyFifth wall JLLand Skanska, Vornado, and Walker & Dunlop.

The program has trained more than 5,000 participants from more than 350 universities around the world and has partnered with more than 250 real estate companies.

And now, he directs some of his efforts specifically toward black student-athletes.

After a recent pilot program with student-athletes from UC Davis, Bobo announced a partnership with Black Student-Athlete Summit, a professional and academic advocacy organization, to offer paid virtual internships to 100 student-athletes from nine Division I schools. . Includes 25 hours of training.

According to a statement announcing the partnership, “Program participants will also join CEOs to evaluate real-time commercial real estate transactions in their community and compete in presentation competitions for top industry leaders.” “Training includes scholarship and networking opportunities.”

Livingston went through the UC Davis pilot his last semester of college, then took an internship with Eastdale and Eden Housing. He is now a Partner in Acquisitions and Development of Catalyst Housing Group, a California-based real estate developer and financial backer of the new partnership.

“I think, for me, it was really a realization that I probably wasn’t going to be one of the favorites in the first round, and that’s a good thing,” Livingston explained. “I was really exposed to other opportunities. That’s why I’m so fortunate to be receiving the Destined Project and it introduced me to the commercial and mental real estate industry that I deserve to be an owner of in the communities I live in.”

This property right has always been Bobo’s motto and was the core of his pitch when he announced the new arm of his program to hundreds of students at the USC Black Student-Athlete Summit. He wants them to understand that they can make a difference in their neighborhoods by owning and managing real estate. Most importantly, he wants them to know that ownership is possible.

“Our show isn’t just about how you all see it,” Bobo said of the real estate executives who attended the announcement. “This is how you see yourselves.”

While the graduation rate for black student-athletes is slowly improving, many students who were overwhelmed with resources at school find themselves struggling once they finish their athletic endeavors and join the workforce.

“A lot of these kids might think they’re a first-round draft pick, and that’s a percentage of a percentage of a percentage, so be real with yourself and know that you deserve so much more than you’re simply exposed, and that’s just a sport,” Livingston said. .

Financial support for the program comes from real estate companies including BGO, Brookfield, Catalyst Housing Group, Dune Real Estate Partners, Jemcor Development Partners, Landspire Group, Marcus & Millichap, Virtu Investments, The Vistria Group, and others.

“Expanding this platform is a natural evolution of this team effort and will provide tangible pathways for thousands of black student-athletes to pursue future careers in commercial real estate,” said Jordan Moss, also a former UCLA student-athlete. Davis, founder and CEO of Catalyst.

Project Destined also works with the NBA and WNBA to give professional athletes more options after completing their sports careers.

Livingston said he believes athletes make the best employees.

“We play to win,” he explained. “It’s the competitive nature. We want to take our chances.”

Home prices fell in January, just 3.8% more nationally than they were a year ago, according to the US National Security Agency’s Standard & Poor’s CoreLogic Case-Shiller Home Price Index. This is down from 5.6% in December.

Prices have been dropping for seven months in a row, but the decline was a bit smaller in January. This was most likely due to a brief drop in mortgage rates and the resulting jump in sales.

The 10-city complex rose 2.5% year over year, down from 4.4% in December. The 20-city composite also rose 2.5%, down from 4.6% in the previous month.

Home prices have fallen due to higher mortgage rates. The average rate on a 30-year fixed mortgage hit more than a dozen record lows during the first two years of the pandemic, falling briefly to less than 2%, but growing sharply. Since the fall, the price has been hovering in the high 6% range, although it has been volatile in recent weeks due to several bank failures and the resulting stress on the banking industry in general.

“Nevertheless, the Fed remains focused on its inflation-lowering targets, which suggests rates may remain elevated in the near term,” Craig Lazzara, managing director at S&P DJI, said in a statement. So mortgage financing and the possibility of economic weakness is likely to remain a headwind to home prices for at least the next several months.

Prices were down year-over-year in San Francisco (-7.6%), Seattle (-5.1%), Portland, Oregon (-0.5%) and San Diego (-1.4%). It was flat in Phoenix.

Miami, Tampa and Atlanta again had the highest annual price gains among the 20 largest cities. Miami prices increased 13.8%, Tampa prices increased 10.5%, and Atlanta prices increased 8.4%. However, all 20 cities reported lower prices in the year ending January 2023 compared to the year ending December 2022.

Homebuyers may see more flexible sellers this spring, but there are still very few homes available for sale. Mortgage lending may also contract given the stress on the banking system.

“More expensive and less available borrowing, especially with an uncertain economic outlook, is likely to continue to dampen buyer demand. Although home sales are expected to rebound in line with seasonal trends, the pace of spring sales is expected to remain lower. Since last year, Hannah Jones, economic data analyst at Realtor.com said: “Because uncertainty and rising costs limit activity.”

The average 30-year fixed rate mortgage rate fell to 6.57% on Monday, according to the Daily Mortgage News. This is down from a rate of 6.76% on Friday and a recent high of 7.05% last Wednesday.

Mortgage rates loosely track yield 10 years treasurywhich fell to a one-month low in response to the failures Silicon Valley Bank And signature bank The ensuing ripple through the country’s banking sector.

In real terms, for a buyer looking for a $500,000 home with a 20% down payment on a 30-year fixed term mortgage, the monthly payment this week is $128 lower than it was just last week. However, it is still higher than in January.

So what does this mean for the spring housing market?

In October, rates rose more than 7%, and that real slowdown in home sales began. But rates then began to fall in December and approached 6% by the end of January. That caused a surprising 8% monthly jump in pending home sales, which is the National Association of Realtors’ measure of contracts signed on existing homes. Newly built home sales, which the Census Bureau measures by contracts signed, also rose much higher than expected.

While the numbers for February are yet to come out, dealerships and builders said sales took a big step back in February as prices rose. So if prices continue to fall now, buyers can come back in again – but this is a big “if”.

“This small banking crisis has to drive a change in consumer behavior in order to have a lasting positive effect on interest rates. It’s still all about inflation,” said Matthew Graham, chief operating officer of Mortgage News Daily.

He added that markets now have to deal with the “inflationary impact of consumer fear,” noting that Tuesday brings a new report on the Consumer Price Index, a monthly measure of inflation in the economy.

Last week, Federal Reserve Chairman Jerome Powell told members of Congress that recent economic data came out stronger than expected.

“If the totality of the data indicates that a faster tightening is warranted, then we would be prepared to increase the pace of rate hikes,” Powell said.

While mortgage rates don’t exactly track the federal funds rate, they are strongly influenced by the Federal Reserve’s monetary policy and its thinking about the future of inflation.

The US housing market is being hit hard by rising mortgage rates, and luxury home sales are seeing the worst of it.

Luxury home sales fell 45% during the three months ended January 3. 31 compared with the same period a year earlier, according to real estate brokerage Redfin. Redfin defines luxury homes as those that are valued in the top 5% based on appraised market value. Non-luxury home sales fell about 38% over that period.

Miami, which saw an influx of affluent buyers who immigrated from the Northeast in the early days of the Covid pandemic, has seen sales drop nearly 69%. This was followed by the Nassau County-Suffolk area of ​​Long Island, New York, home of the Hamptons — down nearly 63%. Some of California’s more expensive markets also saw sales drop significantly because they also experienced significant pandemic sales.

While not all luxury buyers use a mortgage, they are affected by the broader economy, and more specifically the stock market. Therefore, the fluctuations in the financial markets have a great impact on the luxury real estate market.

“The silver lining for luxury buyers still in the market is that there is little competition, and mega loans now often have lower mortgage rates than other types of loans, in part because there is less risk that high-end buyers will default on their mortgages,” he said. Chen Zhao, Redfin Economics Research Lead, said in a statement, “Wealthy home hunters are also frequently offered additional price discounts from their banks as an advantage for storing significant funds there.”

Competition is declining not only because of reduced demand. The supply is going up. Inventory is up 7% year-over-year, the largest increase since 2015.

However, supply also remains historically limited — not much higher than record lows in 2022. New listings are also down 22%, which suggests supply is higher because homes are sitting around longer.

Shortage of supply drove up the price of luxury homes. The average price increased by 9% compared to the same period in the previous year to $1.09 million. Luxury prices hit an all-time high of 1.1 million in the spring of last year.

After declining for five straight weeks, mortgage rates jumped last week, denting mortgage demand.

Total mortgage application volume last week decreased 7.7%, compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($726,200 or less) rose to 6.39% from 6.18%, with the score rising to 0.70 from 0.64 (including origination fees) for loans of 20%. low premium. The rate was 4.05% one year ago.

“Mortgage rates rose across the board last week, driven by market expectations that inflation will persist, requiring the Fed to keep monetary policy constrained for longer,” said Joel Kahn, MBA vice president and deputy chief economist.

Home loan refinance applications fell 13% during the week and were 76% lower than the same week a year ago. At the current rate, 100,000 fewer borrowers could benefit from a refinance than in just one week, according to data from Black Knight. A year ago, with mortgage rates of 4.05%, there were just under 4 million candidates for refinancing.

Mortgage applications for a home fell 6% for the week and were 43% lower than in the same week a year ago. Real estate agents across the country have reported a jump in buyer demand in the past few weeks, which could signal an early start to the historically busy spring market.

“I actually thought, ‘Oh my God, this is amazing. Look how fast it turned into a dime,'” said Dana Rice, a real estate agent for Compass, who was running a packed open house in Bethesda, Maryland, on Saturday. “We went from having no offers and no one coming to open houses, and everything I’ve launched in the last couple of weeks has had multiple offers.”

However, there is an abnormally high level of all cash buyers in the market. Peter Fang is one of them. It was in the open house.

“I am very surprised to see so many cash offers in the market. I thought I would be in a much better position but the competition is still there,” Fang said.

Mortgage rates continued to rise this week after a government report showed inflation was higher than expected in January.

The average rate on a 30-year fixed-rate mortgage has fallen to 5.99%, according to Daily Mortgage News.

The housing market hasn’t seen a five-handle price since as recently as early September. Before that, it was early August.

The rate started this week at 6.21% and fell sharply on Wednesday after Federal Reserve Chairman Jerome Powell said that inflation has “subsided somewhat but remains elevated,” a shift from previous language.

This drove up bond yields, and mortgage rates loosely track the yield on 10-year Treasury notes.

Mortgage rates peaked in October with the 30-year constant at 7.37% and have been falling ever since. For potential homebuyers it means savings. For a consumer who buys a $400,000 home today with a 20% down payment, the monthly payment is $293 lower than it was in October.

Low interest rates seem to pique buyer interest.

Pending home sales, which measures contracts signed on existing homes, rose in December for the first time in six months. They gained 2% compared to November, according to the National Association of Realtors.

Inventories of the country’s homebuilders have been on a tear since rates began to ease and many saw 52-week highs today. the American Homebuilder ETF It hits a new one-year high, up more than 3% on the day.

Homebuilder stocks are also reacting positively to the earnings beats reported this week from Bulletgroup And last week from the nation’s largest homebuilder, Dr. Horton. Both builders reported seeing renewed buyer interest in December, which they attributed to lower mortgage rates.

Homebuilding sentiment in the single-family housing market fell to its lowest level in a decade in November, as builders continue to struggle with rising labor and material costs and declining demand from homebuyers.

The National Association of Home Builders monthly sentiment index fell 5 points from October to 33. This is the 11th consecutive monthly decline and the lowest since June 2012, barring a very brief dip at the start of the Covid-19 pandemic that was followed by a strong rebound.

A year ago, construction sentiment hit 83.

Among the three components of the index, current sales conditions fell 6 points to 39, and sales forecasts for the next six months fell 4 points to 31. Buyers’ movement fell 5 points to 20.

“High interest rates have significantly dampened demand for new homes as buyer traffic has become increasingly scarce,” said Jerry Konter, chairman of NAHB, a builder and home developer from Savannah, Georgia.

Faced with mortgage rates more than double what they were at the start of this year, builders are having to offer potential buyers better deals. NAHB said 59% of builders reported using incentives, a significant increase from September to November.

In November, 25% of builders reported paying buyers points, up from 13% in September. Mortgage purchases rose to 27% from 19% over the same period.

In addition, 37% of construction companies cut prices in November, up from 26% in September, with an average price drop of 6%. However, price cuts are only about half of what builders made in 2008 during the housing crash and Great Recession.

“Even with home prices moderating, construction, labor and material costs — especially for concrete — have yet to follow,” said Robert Dietz, NAHB’s chief economist.

Regionally, on the 3-month moving average, construction sentiment in the Northeast fell 6 points to 41. In the Midwest, it fell 2 points to 38. In the South, it fell 7 points to 42 and fell 5 points to 29 in the West.

The highest mortgage interest rates in more than 20 years coincided with one of the deadliest hurricanes on record in the United States, both contributing to a sharp drop in mortgage demand.

Total mortgage applications fell 14.2% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index, to the lowest level since 1997.

The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.75% from 6.52%, with points decreasing to 0.95 from 1.15 (including the origination fee) for loans with a 20% down payment.

“The current interest rate has doubled over the past year and has increased by 130 basis points in the past seven weeks alone,” noted Joel Kahn, an MBA economist.

Refinancing volume, which is most sensitive to weekly interest rate moves, fell 18% for the week and was 86% lower than the same week a year ago. The share of refinancing mortgage activity fell to 29% of total applications from 30.2% the previous week.

Home mortgage applications fell 13% for the week and were down 37% on the year.

“There was also the impact of Hurricane Ian’s arrival in Florida last week, causing widespread closures and evacuations. Applications in Florida were down 31%, compared to 14% overall, on a non-seasonally adjusted basis,” Kahn added.

With higher interest rates making an already expensive housing market even more expensive, homebuyers have turned more to variable rate mortgages that offer a lower interest rate. That share of activity rose to 11.8 percent from 8.5 percent a month ago and about 3 percent earlier this year, when mortgage rates were less than half what they are now.

Mortgage rates eased slightly this week, according to another survey by Mortgage News Daily, but all bets are off at the end of the week when the all-important monthly employment report is released. Depending on how investors view the results — and how the Federal Reserve might react to those results — mortgage rates could move decisively in either direction.