Home prices continued to increase into the new year, making January the fifth straight month of record-high home prices, according to new S&P CoreLogic Case-Shiller Indices, which measure U.S. home prices.
The latest version of the indices, generated by S&P Dow Jones and CoreLogic, cover all nine U.S. census divisions in the nation and found a 5.9 percent annual gain in January, up from an annual gain of 5.7 percent in December. Also within the index, 20 major U.S. cities saw a 5.7 percent year-over-year gain in January, compared to 5.5 percent in December, according to expert economists polled by MarketWatch.
Despite the numbers, David Blitzer, the managing director and chairman of the index committee at S&P Dow Jones Indices, said that rising home prices shouldn’t impact home sales in the future, but that the incoming interest rate increases could alternatively have a negative effect on the housing market. After an interest rate hike earlier this year, the Federal Reserve said it is likely to raise rates at least two more times this year.
“Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying, but if we see three or four additional increases this year, rising mortgage rates could become a concern,” he added.
Blitzer remains optimistic in an expensive and low-inventory housing market, telling HousingWire that it will eventually level off. “The prices also hurt affordability as higher prices and mortgage rates shrink the number of households that can afford to buy at current price levels. At some point, this process will force prices to level off and decline – however, we don’t appear to be there yet,” he added.